Treasury Management Internation Logo

European Traditional Investment Managers Increase Focus on ESG


European traditional investment managers (IMs) are increasingly focusing on the investment impact of environmental, social and governance (ESG) factors, particularly environmental sustainability, Fitch Ratings says in a new report.

The process has accelerated, helped by the EU’s Sustainable Finance Disclosure Regulation, which aims to make funds more transparent and easier to differentiate with respect to sustainability. Sustainable funds saw record net inflows in 2020 and accounted for 11% of European assets under management (AUM) at end-2020, according to Morningstar. Most demand for sustainable products in recent years has been from institutional investors, but there are signs that ESG momentum is gaining traction with retail investors.

Data from Morningstar and company filings highlight the extent to which ESG funds are growing faster than the overall European market. Net flows into European ESG-focused funds in 2020 were 37% of end-2019 AUM. This compares with average annual net flow rates over 2017-2020 of less than 10% for the overall funds managed by each of the European traditional IMs publicly rated by Fitch.

In a recent survey of Fitch-rated IMs, we found that managers still classify a significant proportion of their funds as Article 6 (non-sustainable, do not integrate any kind of sustainability into the investment process). However, there is momentum towards Article 8 (promoting environmental or social characteristics) and Article 9 classifications (having sustainable investment objectives).

Sustainability has become a differentiating factor for investors, leading to increasing pressure on European IMs to meet the stricter ESG criteria for Article 8 and Article 9 classifications. IMs that lag could lose market share and AUM unless they can differentiate themselves in other ways, for example, by superior performance net of fees.

Most recent episodes

HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...


HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...


The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...


HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....


Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...


HSBC's Sibos Spotlight: Central Bank Digital Currencies

The first edition of HSBC’s Sibos Spotlight series sees TMI’s Eleanor Hill joined by Mark Williamson and James Pomeroy (HSBC) to discuss the hot topic of Central Bank Digital Currencies (CBDCs). Our guests discuss...


Payments Vision 2025: The Inside Track

Wim Grosemans, Steven Lenaerts (BNP Paribas) and Wim Raymaekers (SWIFT) join TMI’s Eleanor Hill to outline their vision for the payments landscape in 2025. Our guests consider how recent developments such as instant...


Stepping Out from the Shadows

“Treasurers needs to step out of the shadows and into the sunshine in terms of their strategic contribution.” claims Zitah McMillan, Co-Founder and CEO, Predictive Black. In this podcast, hosted by TMI’s Eleanor Hill, our guest declares that the...


Why the ‘One Size Fits All’ Approach is Outdated - A Cash Segmentation Treasury Masterclass

With the ongoing low interest-rate environment and increasing regulatory change, it’s more important than ever for treasurers...


Instant Payments: Instant Rewards

TMI’s Eleanor Hill sits down in the virtual TreasuryCast studio with J.P. Morgan’s Global Head of Real-Time Payments, Cyrus Bhathawalla, to discuss how treasurers can capitalise on the evolving nature of real-time payments. Our guest contemplates the elements...