Cerulli Associates’ latest report, Global Markets 2021: Continued Growth in Uncertain Times, has shown that the demand for sustainable investing has only increased in the past year, while responsible investment products have consistently outperformed.
The report supports a recent study by Responsible Investment Association Australasia (RIAA) that found that responsible assets grew by 15 times the rate of the overall Australian market in 2020.
“Investor interest in responsible investment and related themes has been accelerated by the events of the past year and shows no sign of slowing,” said André Schnurrenberger, managing director, Europe at Cerulli Associates.
“Asset managers that can offer specialised value propositions that focus strongly on specific ESG factors will find a receptive audience”.
Cerulli’s report found that a number of investment professionals globally are aware of the opportunities presented by ESG investing, and are readily readjusting investment products accordingly.
It uncovered that almost 90 per cent of US asset manager product executives, interviewed during 3Q 2020, said that incorporating ESG criteria into investment products and processes is at least a moderate priority.
They said that demand from both retail and institutional investors had grown – with further gains expected as wealth transfers towards younger generations.
In Italy, 30 per cent of managers surveyed said they expected high demand for sustainable thematic funds and impact investing funds in the country over the next 12 to 24 months.
France, which the report showed to be one of the fastest-growing sustainable investment markets in Europe, had several managers say they planned to redesign existing offerings into more ESG-friendly versions over the next year.
Pension funds in France are increasingly favourable to sustainable investment strategies and funds that focus on the transition to a low-carbon economy.
Many Dutch managers interviewed said they planned to launch fixed-income and multi-asset funds that incorporate ESG factors this year, seeing opportunity in local markets as funds largely do not cater to more risk-averse ESG investors.
In Hong Kong, the study found that there has been a high demand over the last year for thematic funds accessing opportunities created by the long-term structural changes in sectors such as technology, biotechnology, and sustainable investing.
“We expect the spread of ESG investing to continue around the world to varying degrees,” said Mr Schnurrenberger.
The report also highlighted the importance for asset managers to meet the deeper scrutiny being placed on ESG products. Regulation and investor sentiment are increasingly demanding that ESG funds show transparency on the nature and impact of their investments.
Again Cerulli’s report found that asset managers are rising to this challenge. More and more ESG investments studied operated within a clear mission statement and culture that hold gender and racial diversity and inclusion as central.
