Market Research
The ESG Phenomenon: PwC Luxembourg

The latest developments in the ESG space.
PwC
PwC
Luxembourg has launched a new interactive ESG dashboard which
reveals that 66 per cent of European institutional investors plan
to stop investing in non-ESG funds.
The dashboard is designed to help European asset managers expand
their ESG operations and gain an accurate view of investor demand
and market developments, the firm said.
It consists of an interactive data tool, interactive report
titled: The ESG Opportunity in Europe and raw data
files, gathered from a total of 3,354
respondents across eight European countries: the UK,
Switzerland, France, the Netherlands, Germany, the Nordics, Spain
and Italy, the firm added. The respondents include 720
European institutional investors, 320
distributors, 1,994 individual investors and 320
asset managers.
Institutional investors
The results show that European institutional investors are
demonstrating an increased willingness and readiness to absorb
higher fees in order to unlock ESG’s risk mitigation and value
creation potential, with 71.9 per cent of those surveyed
willing to paying a premium for ESG products.
They are also set to significantly bolster their exposure to
Article 8 products, results from the dashboard reveal. While 42
per cent of them currently allocate over 30 per cent of their
European assets under management in Article 8 funds, this figure
is set to increase to 68 per cent in the coming 12 to 24
months, the firm added.
Distributors
In addition, results from the dashboard show that almost 70 per
cent of European distributors anticipate heightened retail demand
for Article 8 equity funds over the coming 12 to 24 months
and as many as 68 per cent are considering halting
their distribution of non-ESG products altogether.
Individual investors
The dashboard also reveals that 67 per cent of retail, mass
affluent and (ultra) high net worth investors are willing to pay
an ESG premium whilst 50.2 per cent are considering halting
their investments in non-ESG funds.
Asset managers
Almost 72 per cent of surveyed European asset managers
are considering halting their non-ESG product launches
entirely, with over 60 per cent aiming to do so by the end
of 2024. Seventy-six per cent also plan to hold over 30 per cent
of their European assets under management in Article 8 funds
within the coming two years, a jump from the 42 per cent that
currently do so, the firm said.
Reacting to the results, Olivier Carré, financial services market
leader, said: “This report highlights a historic asset and
sentiment shift within Europe’s investor bases, one which has
seen ESG evolve from a ‘nice to have’ for the most sustainability
conscious investors to an all-encompassing paradigm shift across
Europe’s traditional investment landscape.”
“Regulatory developments are a primary driver behind this growth
and have led to the foundation for ESG standards to become
increasingly extra-territorial. We are already seeing likely
international regulation following the EU’s example in this
regard, particularly in light of mounting global political
commitments towards tackling ESG and sustainability issues,” he
added.
The dashboard also forecasts that European-domiciled ESG
assets will reach between €7.4 trillion ($7.82
trillion) and €9 trillion by 2025, accounting for between 46
per cent and 56 per cent of total European Mutual Fund assets,
which is up from 37 per cent at the end of 2021, the firm
added.
European-domiciled ESG ETF assets are also expected to surge
at a CAGR of between 33.3 per cent and 43 per cent, to reach
between €684 billion and €906 billion by 2025, the firm
stressed. ESG Equity ETFs are set to significantly underpin this
growth in both forecast scenarios, with total assets in this
segment growing at a CAGR of between 33.6 per cent and 43.2 per
cent.
Wrapping up, Dariush Yazdani, global asset and wealth management
research centre leader, said: “As regulators and society
increasingly urge investors to incorporate sustainability
considerations within their investment policies and operations,
managers will see a continued surge in demand for ESG products in
the coming years.”
PwC Luxembourg provides audit, tax and advisory services
including management consulting, transaction, financing, and
regulatory advice.