Experts from the Polish Economic Institute in the latest PIE weekly indicate that, according to estimates, from 2028 to 2050, Poland will need a total of an additional €1.904 trillion for investments to achieve climate neutrality, with the annual investment gap expected to be nearly €83 billion.
The Institute added that in the second quarter of 2024, there were 61 green investment funds in Poland managing assets worth 10 billion PLN. “Most of these funds met the criteria of compliance with Article 8 of the SFDR (Sustainable Finance Disclosure Regulation – a directive on sustainability-related disclosures) – their assets amounted to 9.67 billion PLN at the end of March 2024,” it was noted.
Experts explained that the funds included in this category are referred to as “light green.” “They promote investments in environmentally friendly or socially beneficial projects, however, these areas are not the main goal of the projects financed by them,” they pointed out. “On the other hand, the assets of dark green funds, meeting the criteria of compliance with Article 9 of the SFDR, amounted to 0.3 billion PLN,” added the experts. These funds invest in projects aimed at achieving strictly defined sustainable development goals.
PIE noted that “at the current stage of development of the green finance market in Poland, it will be difficult to raise the necessary funds from the capital market.” It was added that the amount of 10 billion PLN managed by Polish sustainable funds represented “merely” 3% of the total value of assets of Polish Investment Funds (TFI).
“As of the end of February 2024, Polish investment funds had funds amounting to 326 billion PLN,” the institute emphasized.
In the PIE Economic Weekly, it was indicated that the growth in asset value of green investment funds in Poland was 88% compared to the second half of 2023. “This increase was not so much due to the influx of additional funds, but rather because some funds met the criteria outlined in the SFDR directive,” the experts stated. They believe “the amount that sustainable funds in Poland manage is insignificant compared to the scale of investment needs associated with the transformation of the Polish economy.”
The global value of assets managed by green funds was $3.36 trillion at the end of 2023, marking a 15% year-over-year increase.
“Simultaneously, this is only a small (2.8%) part of the overall value of assets managed by investment funds worldwide – their assets are valued at $118.7 trillion,” observed the institute, adding that the majority of funds investing in sustainable development operated in Europe. European entities held 70% ($2.37 trillion) of the global value of assets owned by sustainable investment funds.
“In the context of the size of the U.S. financial market, the low value of green assets owned by U.S. entities is surprising. Their value in the second half of 2023 was merely $313 billion,” stated the PIE experts. They reported that in recent months in the United States, there has been a withdrawal of financial resources from sustainable funds. “It is indicated that since the beginning of 2024, investors have withdrawn $40 billion net from equity funds investing in companies operating according to ESG standards,” the institute provided.
According to PIE, this is contributed to by the poor performance of companies, scandals related to greenwashing, and the inclusion of ESG factors in the political competition between Republicans and Democrats in the United States.”