Investor interest, primarily from Asia and Europe, propels a resurgence in the share price of clean energy companies
In the dynamic world of finance, the demand for sustainable and clean energy funds has surged in Asia, particularly in China and Taiwan, over the past year. This trend, driven by a combination of factors, has positioned Asia as a key player in the global energy market.
The rapid expansion of Taiwan's ETF market, reaching TWD6.4 trillion (~USD220 billion) in assets by the end of 2024, is a testament to this growth. Retail investors, seeking low-cost, liquid investment options, have fueled continuous net inflows into Taiwan-domiciled sustainable funds since late 2023, reflecting a heightened demand for ESG (Environmental, Social, Governance) products [1].
Government incentives have also played a significant role in this surge. Countries like Thailand have introduced tax deductions for investments in ESG mutual funds and ESG-themed funds, encouraging inflows into sustainable assets focused on domestic sustainability [1]. China, despite experiencing outflows since mid-2022, has seen a modest inflow into sustainable funds in early 2025, signaling cautious optimism. This trend is supported by ongoing regulatory support for green finance, an expanding ESG product pipeline, and efforts to improve transparency and standardization that increase investor confidence [1].
Asia-Pacific is forecasted to be the primary driver of global energy growth by 2040 due to rapid economic expansion, population growth, industrialization, and digital transformation. Institutional commitments, such as the Asian Development Bank's $3.8 billion investment in energy projects in 2024, over 80% targeted at climate mitigation, further stimulate fund demand [2].
China's renewable power investment in 2024 was nearly $360 billion, almost twice its fossil fuel investments, indicating a structural shift towards renewables. This transition underpins investor appetite for sustainable funds aligned with clean energy growth [4].
The iShares Global Clean Energy ETF (ICLN US) has been a standout performer in this context, outperforming the Energy Select Sector SPDR ETF (XLE US) with a return of 15.6% compared to 1.2% [2]. Asian investors have shown a growing demand for clean energy stocks, with Taiwan's ETF market becoming the third largest in Asia [3].
However, the landscape is not without challenges. Some clean energy firms, such as Orsted and Vestas, have experienced share price drops close to 30% year to date. The MSCI World Selection Index, despite challenges for individual stocks, has kept pace with the broader market [5].
IEEFA's research, based on data from the Taiwan ETF market and China's ETFS, has noted an interesting pattern of regional divergence. While US demand for sustainable funds decreased by 4% in Q1, some Asian markets, starting from a lower base, appeared to turn a corner in 2025 [6].
Despite the EU's new SFDR rules causing sustainable funds to report outflows of $8.6bn in Q1 2025, IEEFA's research indicates that more widely diversified ESG and clean energy funds have recovered in the first half of 2025 [7]. IEEFA's research does not mention any outflows from clean energy funds in Q1 2025 for Asian markets [8].
In summary, increased retail and institutional investor interest, supportive government policies, robust clean energy market fundamentals, and an improved regulatory environment explain the rising demand for sustainable and clean energy funds in China, Taiwan, and broader Asia in 2024 and early 2025 [1][2][4]. As of 27 June 2025, the iShares Global Clean Energy ETF (ICLN US) has returned 15.6% gains to investors year-to-date [9].
The surge in demand for sustainable and clean energy funds in Asia has sparked interest in environmental-science projects, as highlighted by the Asian Development Bank's $3.8 billion investment in energy projects aimed at climate mitigation in 2024 [2]. This increased demand has also stimulated investments in technology, particularly in the renewable energy sector, with China's renewable power investment reaching nearly $360 billion in 2024 [4].
