Asset managers in Europe and the US have spent 2024 winding down hundreds of ESG funds, as the investment strategy continues to bump up against regulatory headwinds.
For the first time ever, ESG funds suffered net global outflows amid a major exodus by US investors from environmental, social and governance strategies.
The asset management arm of BNP Paribas SA said using a different interpretation of “sustainable investment” than some of its peers has allowed it to keep the European Union’s top ESG tag attached to about $20 billion worth of funds.
Asset managers are trying to digest new regulatory proposals that have the potential to upend Europe’s biggest ESG fund category.
Amundi SA is removing the European Union’s highest ESG designation from virtually all funds that once carried it, as it joins a growing list of investment firms that have been wrong-footed by a change in regulatory guidelines in the bloc.
Financial market participants are asking for more regulations and better supervision to help rein in exaggerated ESG claims.
Europe’s top ESG fund class may be close to reaching a tipping point.
Asset managers that just reclassified hundreds of ESG funds should expect to have to explain themselves to their regulators and investors, according to lawyers advising the industry.
BlackRock Inc.’s greenest exchanged-traded funds have seen a 30% increase in inflows as investors seek out the most credible ESG products amid a wider cooling toward the industry.
Few corners of the financial universe have been surrounded by as much marketing froth as ESG, which by some estimates represents more than $40 trillion in assets. According to Morningstar, genuine ESG funds held about $2.7 trillion in managed assets at the end of the fourth quarter.
The unfettered boom in ESG debt has created some accounting concerns that are in urgent need of regulatory attention, according to Europe’s markets watchdog.
When Swedish bank SEB AB announced recently that it wanted to buy into the market for carbon credits, what it got was a pile of duds.
In the region that ushered in the world’s first green bond, banks are now building private databases to help their clients navigate the dark side of ESG.
