Developments and commentary in and around the ESG investment space.
As the appetite for ESG spreads and begins resonating with retail investors, 76 per cent of the private banks in Europe expect to see strong increased demand for ESG funds over the next 12 to 24 months, compared with 52 per cent among independent wealth managers and 43 per cent among independent financial advisors, according to Cerulli’s latest poll.
Two-thirds of fund managers in Europe, where the market has matured fastest, believe that the pandemic has spurred demand for ESG integration, notably among retail investors. Most managers also expect to see an increase among institutional investors, Cerulli said.
The surge is causing a rush to design new customised ESG products across asset classes.
“Specialist products are coming into the market at a fast pace,” says Fabrizio Zumbo, Cerulli's associate director of research for European asset and wealth management. A frequent industry refrain has been the lack of quality ESG products to meet rapid demand, causing concerns that a degree of opportunism and relabelling of existing funds to tout ESG credentials will encourage more greenwashing.
In the ETFs market, almost all European managers polled see funds focused on reducing carbon footprints or excluding fossil fuels being the dominant themes over the next two years.
“In the near future, greater standardisation in the ESG sector is expected, which could spur the growth of ESG model portfolios among retail clients and adoption among investors with lower levels of investable assets,” Zumbo said.