As the enthusiasm for climate-friendly investing hits fever pitch, analysts warn that investors are pumping cash into anything that looks “green” — sending valuations of eco-friendly companies into the stratosphere and fanning fears of a bubble.

Larry Fink, chief executive of the world’s biggest asset manager, BlackRock, said last month that the market is undergoing a “tectonic shift” towards sustainable investments. Global funds linked to environmental, social and governance principles took in nearly $350bn last year, compared with $165bn in 2019, according to data from Morningstar.

The green portion of that investment has been encouraged by a massive change in consumer demand. BloombergNEF data show that companies, governments and households spent more than $500bn on renewable energy and electric vehicles in 2020.