Markets Columnist

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PREMIUM

July 16 2026

Good morning. SpaceX’s shares closed yesterday back at their $135 listing price, down about 40 per cent from the June peak of $225 per share. Its bonds are drifting towards junk status. A banker at one of its IPO underwriters told our colleagues on the markets desk: “the people who are buying the stock are actually really smart investors”. Odd, then, that this person didn’t want their name on the record. Has common sense prevailed? Email us: unhedged@ft.com.

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ESG

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Sustainable investment is so over. A few years ago, banks and asset managers would not shut up about it. Everything came with an ESG label, touting the environmental, social and governance-related virtues of investment vehicles for an investing public keen to put their money to good use.

But since the early 2020s, it has all gone suspiciously quiet. Trump 2.0 gets a lot of the blame for this, but we at the FT made an entire film about the decline and fall of ESG fully two years ago, before he returned to the White House.

So it was not just politics — the ESG craze also collapsed under the weight of its own internal contradictions, its tendency to overpromise and then from the fact it had its butt kicked, first by the outperformance of non-green energy (thanks to Russia, 2022) and then AI. You might even slightly blame it for years of under-investment in defence. Some people will always hate it and hey, it’s a free country (Rob is one of those people, by the way, and never shuts up about it; see here, here, here, here and here).

Demand for dedicated sustainable investment products has undoubtedly wilted. Last year was not good for sustainable fund inflows: $84bn in outflows, according to Morningstar, after $38bn of inflows in 2024. But a big caveat is that outflows from sustainability-focused mutual funds and exchange traded funds are not necessarily outflows from sustainable strategies. As Morningstar stresses, some are just flipping out of off-the-shelf products and into bespoke portfolios.

But something of a revival may be afoot. Data this week from European asset manager Amundi showed record inflows into ESG funds through the course of 2026. It said:

In both Q1 and Q2 of this year, ESG net new assets has come in at more than €21bn, respectively, for a combined first-half total of almost €43bn — a more than three-time increase compared to H1 last year.

The US is probably a lost cause. It has racked up more than three straight years of outflows from sustainable funds, according to Morningstar. Europe, however, has never really given up on it. OK, Amundi is just one shop. But it’s no minnow, and this could end up reflecting the start of a proper revival, especially as the case for investing in green energy in the wake of the Iran crisis is almost too obvious to bother pointing out. Also, even the most dedicated climate change flat-earther struggles to dispute that in Europe right now, it’s quite hot. We should maybe do something about it? Any investor who is not thinking about where this is all heading and how it might affect their strategy in the coming years is doing it wrong.

In a weird way, though, on some level, all investors have some kind of climate focus now. In its latest financial stability report last week, the Bank of England pointed to climate change as one of the key drivers for rising levels of government borrowing globally, right up there with defence and demographics.

Fidelity is one investment house that has done a fair amount of work on this. (You can read its research on the implications of a “disorderly transition” in the climate from July 2024 here.) As you might expect, the impact depends on what we stupid humans do next. They write:

Global GDP losses by 2050 could range from around 7% in an orderly Net Zero pathway to around 14-15% under current policies, relative to a no-climate-risk baseline.

The implications for investors are significant. Our research shows that climate risks can affect expected returns of asset classes, with equities generally more affected than bonds. Specifically, over the next 10 years, we estimate an annual decline in expected global equity returns, ranging from -0.4% in scenarios in which transition is achieved to a steeper -1.1% [per annum] in hothouse and fragmented world scenarios.

And this is all before you consider physical damage from extreme weather events.

Aircon stocks are doing well at the moment. This is nature’s way of telling investors to wake up to the obvious implications of climate change even if they don’t consider themselves to be socks-and-sandals ESG devotees.

One good read

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Europe vs the US

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