Climate-focused funds in China grew by almost 150% last year, moving the country past the US to become the second-largest global market, bolstering the push for China to become a carbon neutral country by 2060, reports Bloomberg. China’s fund assets grew to $47 billion in 2021, a 149% increase from the previous year sparked by record inflows and outperformance by the domestic clean energy sector. In the US, climate funds rose to $31 billion, while Europe, by far the biggest market, almost doubled to $325 billion.
“In the West, climate protection awareness is probably a main factor driving the growth,” said Morningstar ESG analyst Boya Wang. “In China, it’s largely driven by policy. After the government officially approved carbon neutrality and net-zero targets in 2021, we saw a mushrooming of all these new climate funds.”
Investors in China added $11.3 billion into climate-focused funds last year, almost double their 2020 level. They were richly rewarded. Chinese climate funds were up 15% on average in the 12 months to April 2022, compared with a 7.2% decline for US funds.