According to a survey released by PwC Luxembourg on Monday, more than two-thirds of European asset managers and distributors are considering delaying the launch or distribution of products that do not comply with environmental, social, and governance (ESG) requirements.

In recent years, flows into ESG funds have soared, driven in part by a greater regulatory focus on issues such as climate change, as governments strive to allocate more capital to activities that can assist them in achieving their net-zero emissions goals.

The PwC study of 3,354 respondents indicated that ESG assets domiciled in Europe could increase to between 7.4 and 9.0 trillion euros ($7.8 and $9.5 trillion) by 2025 and contribute to up to 56 per cent of total European mutual fund assets, up from 37 per cent at the end of last year.

PwC predicted long-term issues for asset managers who retain a hybrid ESG/non-ESG product offering as the transformation materialises.

The survey revealed that 68 per cent of independent financial advisers, private banks, and retail banks want to halt the distribution of non-ESG products entirely, with more than half planning to do so within the next two years.

Financial services market leader at PwC, Olivier Carre, said, "As regional regulations become increasingly stringent and as efforts towards the development of global ESG standards intensify, managers—especially those willing to compete at a global level—will be pushed towards an all-encompassing alignment of their products and operations with ESG."

Source: Reuters

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