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Analysis: Europe leads on ESG

ESG
By Paul Mackintosh   
December 1, 2021

PricewaterhouseCoopers has singled out the leaders in a new impetus for European finance, and indeed, for global asset management in a new report. And it appears that European asset management firms are taking a commanding lead in managing green assets since the European Union’s Sustainable Finance Disclosure Regulation (SFDR) came into force in March 2021.

PwC’s verdict is that “Europe’s fast-evolving regulatory landscape has positioned the region at the forefront of the ESG revolution”.

The report ranks Amundi SA as the leader in this field, followed by BlackRock Inc., BNP Paribas SA, Swedbank AB and Nordea Bank Abp.

PwC divides the green assets according to SFDR criteria as Article 8 funds, which promote “environmental or social characteristics, or a combination”, and Article 9 funds, which “specifically have sustainable goals”.

In total, it says there was around 3.3 trillion euros (US$3.7 trillion) in green fund assets under management at of end-June. Some 92% are Article 8 funds and the rest Article 9 funds.

PwC notes that this level of EU-domiciled ESG assets already represent around 32% of EU-domiciled AUM at the end of the first half of 2021. Luxembourg is rated as by far the largest domicile in Europe for ESG funds, with France and Ireland some distance behind.

PwC expects the entire EU-domiciled ESG assets space to mushroom to 7.6 trillion euros by 2025, or 57% of total EU-domiciled mutual fund AUM. Needless to say, that still represents only a small share of total global AUM, estimated at just over $103 trillion by Statista as of end-2020, with the US accounting for roughly half.

PwC’s data demonstrate the commitment in the investment community to green assets, and the lead achievable by early and pro-active regulation and categorisation. Despite its critics, the SFDR appears to be anything but a busted flush, and asset managers look to be capitalising on its regime.

Asset managers already accounted for $57 trillion of the $130 trillion-plus of assets subsumed in the Glasgow Financial Alliance for Net Zero announced at the recent United Nations climate conference, with $63 trillion from banks and $10 trillion from institutional asset owners. European groups such as HSBC and Santander are prominent among the signatories. The race is on to seize the crown in this new opportunity, and Europe looks to be taking pole position.