‘Collateral Damage’: ESG Funds Pulled Down by Tumble in Tech Shares
Funds focused on environmental and governance issues have heavy allocations to tech sector.
Parnassus Core Equity Fund, with $25.9bn under management, has fallen by over 18 per cent in 2022 while Vanguard’s $14.3bn FTSE Social Index fund is down over 22.5 per cent. Technology is the top sector in both funds, making up 30 per cent of the Vanguard fund’s investments and over a fifth of Parnassus’. Other big ESG funds have also been knocked this year.
Tech has typically been a big part of ESG portfolios because their carbon footprints tend to be lower than peers in other industries, and they have policies in place on issues such as diversity and human rights, while making up an outsized proportion of public markets due to their huge size.