European fund managers set to go all in on ESG: survey

OVER 2/3 of European asset managers and distributors are considering halting the launch or distribution of products that do not comply with environmental, social and governance (ESG) standards, a survey by PwC Luxembourg showed on Monday (Jun 27).

Flows into ESG funds have surged in recent years, driven in part by a growing regulatory focus on issues such as climate change as governments seek to push more money to activities that can help them meet their net-zero emissions goals.

The PwC survey of 3,354 respondents suggested ESG assets domiciled in Europe could grow to between 7.4 trillion euros and 9.0 trillion euros (S$10.8-13.2 trillion) by 2025 and account for up to 56 per cent of total European mutual fund assets, against 37 per cent at the end of last year.

Against that backdrop, almost 72 per cent of European asset managers were willing to halt all non-ESG product launches, with more than 60 per cent planning to do so by the end of 2024, PwC wrote in its report, adding that it foresaw long-term challenges for asset managers that maintain a hybrid ESG/non-ESG product range as the shift materialises.

Among independent financial advisers, private and retail banks, as much as 68 per cent plan to cease their distribution of non-ESG products altogether, of which over half intend to do so within the coming 2 years, the survey showed.

"As regional regulations become increasingly stringent and as efforts towards the development of global ESG standards intensify, managers — especially those willing to compete at a global level — will be pushed towards an all-encompassing alignment of their products and operations with ESG," financial services market leader at PwC Olivier Carre said.