About a third of globally managed money is invested in environmental, social, and governance strategies. However, is all that money really being invested toward sustainability efforts?

According to Global Sustainable Investment Alliance’s (GSIA) latest report, sustainable investment assets expanded to $35.3 trillion globally last year, or $1 of every $3 in globally managed money, amid growing concerns over societal inequities and climate change, Bloomberg reports.

However, GSIA added that the lion’s share of the money, or about $25 trillion, is invested in strategies called “ESG integration” or “ESG consideration.”

While these ESG integration strategies allow managers to include ESG data in financial models, Rob Du Boff, an analyst at Bloomberg Intelligence, warned that money managers may actually only be “aware of” and “take into account” ESG factors when making their investment decisions. Essentially, these managers may not actually be forced to act on ESG input data and only look at them as considerations.

Nicolette Boele, an executive for policy and standards for the Responsible Investment Association Australasia, also agreed with the analysis that ESG integration doesn’t always mean the money is actively put toward sustainability. She argues that unless it’s tied to factors like proxy voting and corporate engagement, the money managers alone won’t necessarily “deliver better sustainability outcomes for a better world.”

The surge in ESG interest has caused many large fund managers to integrate ESG across their holdings in a bid to attract more assets from pension plans and other socially responsible investors. However, since ESG lacks clearly defined criteria, Lisa Sachs, who heads Columbia University’s Center on Sustainable Investment, cautioned that it can often mean different things to different people.

Since ESG integration is often associated with other responsible investment themes like impact investing and negative and positive screening, the current trends are fueling a false impression that money managers are directing capital toward solving societal shortcomings.

“The major risk is that finance is purporting to solve social and environmental problems through ESG and that there’s no need for government action,” Sachs told Bloomberg. “But we need rigorous policy to address the big issues.”

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