Attracting flows to sustainable companies has been a difficult task over the past couple of years, with all manner of criticisms levelled against the ESG sector.

We have documented some of the struggles facing sustainable portfolios across the MPS world in our analysis at the end of last month but another set of capital allocators can also be said to be tempering their support for greener assets. 

Family offices also hold resoundingly little sustainable assets in their expansive portfolios. 

The latest Citi Global Family Office report found more than 80 per cent of those surveyed had less than 10 per cent of their assets in anything remotely sustainable. 38 per cent had zero exposure at all. 

Why so low, you ask? 

The respondents said their principal challenge was navigating the limited availability of investment opportunities with competitive financial performance. Not only this, but 'uncertainty as how to transform sustainability objectives into an actionable investment strategy' and a 'lack of compelling investment opportunities that reflect sustainability aims' were cited as two other reasons behind the disinterest. 

Over on the philanthropy side, there is even less enthusiasm for sustainable investing. 

Almost one in two respondents were simply 'not interested' and other focus areas are deemed more important – yikes. 

The report added that environmental causes remain one of the least funded areas globally, despite the 'heightened attention it receives from the media and the next generation'. 

What's the outlook on the supply side, then?

Well, there are a number of hurdles that the wholesale market needs to tackle to prepare for any eventual revival in demand for such products.

The FCA has acknowledged it has taken longer than expected for firms to make changes to their fund names when dealing with new sustainability labels under SDR legislation.

Now the deadline has been extended until the second quarter of 2025 – April 2, to be precise – for firms to comply with the naming rules.

But the general mood surrounding sustainable portfolios isn’t exactly one of hope. 

“Although we are happy to run ESG portfolios, based on exclusionary criteria, we suspect that the further growth could be limited,” said James Crocker, partner at Albert E Sharp. “The issue of greenwashing is endemic and investors are becoming aware of this.”