ALFI: Key findings from the European Sustainable Investment Funds Report 2022
22 June 2022
Europe holds 83% of global sustainable funds’ net assets, reaching almost EUR 2 trillion at the end of 2021, up 71% from 2020
Key findings from study on sustainable investment funds by Morningstar, zeb and ALFI
- Europe holds 83% of global sustainable funds’ net assets, reaching almost EUR 2 trillion at the end of 2021, up 71% from 2020
- Sustainable fund products reflect 16% of total net assets of
funds domiciled in Europe, ahead of the US and Asia, with only 1% and
5% respectively
- Luxembourg maintains its market leader position with about a
third of the assets managed by sustainable funds in Europe being
domiciled there
- Equity remains the most important asset class making up 64%
of the sustainable fund assets compared to 48% in conventional funds,
allowing asset managers to exert a great influence on the ESG efforts of
companies
- Sustainability strategies such as impact funds are still far
outweighed by funds with less ambitious ESG objectives, yet assets in
impact funds did increase by 50% in 2021, compared to 2020
- At European level, about 44% of net assets were categorised
by their managers as Article 8 or Article 9 funds according to the
Sustainable Finance Disclosure Regulation (SFDR)
Europe remains the key driver behind sustainable finance, holding 83%
of global sustainable funds’ net assets, according to the second annual
European Sustainable Investment Funds Study by
Morningstar and zeb, powered by the Association of the Luxembourg Fund
Industry (ALFI). The study found that the net assets in sustainable fund
products based on Morningstar’s strict definition of sustainability
have reached almost EUR 2 trillion at the end of 2021, up 71% from 2020.
This study aims to provide a snapshot on how sustainability
objectives and the respective legislative interventions are shaping the
fund industry in Europe, and to analyse the role, competitiveness, and
positioning of the different domiciles within this dynamically changing
environment. It is the second of a series of regularly conducted studies
based on an analogous approach to monitor the dynamic development and
trends of the European sustainable funds’ sector.
Marc-André Bechet, Deputy Director General of ALFI,
commented: “Sustainable finance is at a crossroads and 2022 will lead to
a moment of truth. While there is a genuine willingness of the asset
management industry to meet the challenges of sustainable finance and
strong demand from retail and institutional investors alike, the reality
is that, so far, funds which pursue one or several environmental
objectives have not really been able to show their true credentials.
However, companies are now starting to report on the alignment of their
activities in line with the Taxonomy Regulation, and for those that do
not yet do so, reporting will be required from 2023 and 2024 onwards.
Which I believe is a crucial step forward.”
Hortense Bioy, Global Director of Sustainability at Morningstar said:
“Since its introduction in March 2021, SFDR has acted as a catalyst for
product development and innovation in the European sustainable funds
space. It will be fascinating to see how regulation continues to shape
the landscape. The changes to MiFID II taking effect in August and
requiring financial advisers to consider their clients' sustainability
preferences have the potential to accelerate adoption of sustainable
investments among retail investors. Despite all the concerns about
greenwashing, our data shows that investor appetite for ESG and
sustainable strategies is still growing.”
Dr. Carsten Wittrock, Partner at zeb, added: “Our
new study confirms the forecasts we made in our previous edition: the
industry’s shift towards sustainability is progressing at high speed
despite an unprecedented dynamic geopolitical and regulatory
environment. Although there is still quite a long way to go before the
full potential of the fund industry in supporting the urgently needed
transformation process of the economies toward greater sustainability is
unleashed, it is safe to conclude that the trends highlighted will
continue – despite the critical discussion about the role and handling
of sustainability by individual asset managers, the ongoing need to
clarify sustainability factors and their appropriate implementation, and
the recent setbacks in tackling climate change due to the tragic
conflict in the Ukraine and its drastic consequences not only for the
people but also the global economy.
To read the full press release, download it in English, French or German.
Download the study here.
ALFI
© ALFI - Association of the Luxembourg Fund Industry