RWC Partners fund manager Graham Clapp warned that sustainable investing trends are poised to form a possible bubble in the markets. He compared it to the tech boom of the 1990s.

“You can liken it to the tech bubble where people wanted to have exposure to the new economy stocks, so a lot of money poured into certain kind of business models and valuations were pumped up and incredibly stretched. When such large influxes occur – as we’re currently seeing with ESG – then supply and demand mean the price is going to change,’ Clapp said.

He spoke on the valuation stretch of the late 1990s. During the Dot-com boom, price-to-earnings stretched to 80 times before retreating back to 30 times earnings.

“We’re not quite there yet but it’s getting to the point where anything related to hydrogen or other green technologies, for example, are all up 100% in six months, despite the fundamentals not having changed,” Clapp wrote.