Fund managers made ‘ridiculously extravagant claims’ on ESG, Aberdeen boss says
Fund managers have made a “huge mistake” with their “ridiculously extravagant claims” on ESG investing, the boss of asset management giant Aberdeen has said amid a global retreat from ethical funds.
Sir Douglas Flint told the City Week conference that investors had adopted a mindset of “we’re not really about investing money, we’re just jolly good people and we’re saving the world.”
“Our industry then made a kind of huge mistake, it became a marketing thing, let’s tell everyone we’re saving the world, we’re saving the planet,” he said.
Flint, a former HSBC chairman, warned the approach both distracted from the company’s main investment role, as well as exposed firms to a “feast” of lawsuits, adding statements on ESG and diversity were now “in every search engine for a US litigation lawyer.”
ESG retreat
The comments come amid a widespread retreat from ESG investing, spurred by the arrival of president Donald Trump in the White House.
As much as £6.2bn was withdrawn from sustainable funds in the first quarter of 2025, according to data from Morningstar, while a host of global financial centres saw their green finance rating reduced in the latest edition of Z/Yen Global Green Finance Index. Despite topping the index, London’s rating reduced 36 points to 598.
Professor Michael Mainelli, former Lord Mayor and chairman of the Z/Yen Group, said “the tide of support has receded from North America”, adding: “the new administration pulling back from climate commitments shows how shallow green finance waters remain.”
Flint said fund managers had since begun tackling environmental issues “in a much more rational way.”
“We try and choose the companies that are making the most effective steps towards transition in the portfolios that we manage,” he said.
“But it’s our clients who mandate the areas and the pace that we go at.”
Speaking at City Week, City minister Emma Reynolds reaffirmed the government’s ambition for a green transition across the financial services sector, despite the industry pivoting on climate priorities.
Reynolds said: “The UK has a world leading financial and related professional services ecosystem and the research that is needed to integrate sustainable finance.”