Trends in ESG 2024

This research report is the first in a series that is designed to examine and explain aspects of the rise in importance of assets that feature environmental, social or governance (ESG) components.

Published on: 11 Mar, 2024somdn_product_page

Description

Intended as a primer on the development, current state and likely future of the ESG sector, the report highlights that, despite debate about what ESG means and a backlash over its adoption in some quarters, the past five years saw the volume of assets under management labelled as having an ESG component grow roughly four times that of overall global AuM. In the same period, the global AuM of all assets held everywhere fell by 10%.

From a business perspective, the report explores how a real market for ESG products and services came into being, with more than 90% of asset managers planning to integrate ESG into investment processes and more than 95% of asset owners planning to do the same. This growth is driven by factors such as investor demand for portfolios to incorporate ethical considerations as well as studies showing that there is a positive correlation between a ‘good’ ESG rating and positive financial performance.

The report also clarifies the principal concepts of ESG, and it highlights how regulation related to ESG products in capital markets is aimed at coherently describing what constitutes those products. Regulatory initiatives are the primary factor in establishing the framework that surrounds ESG. This is particularly true in the EU.

As such, this report looks at the key parts of the EU ESG regulatory programme. Specifically:

  • The Corporate Sustainability Reporting Directive (CSRD); and
  • The EU Taxonomy.

The report also considers how the UK’s ESG regulations will develop in parallel with the EU’s mandates as well as the requirements of other international regulators such as the International Sustainability Standards Board.

Table of Contents

  • 1.0 The Rise of ESG in Investment Strategies
    • 1.1 Growth in ESG-labelled Assets is Outpacing Other Asset Types
    • 1.2 Clarity is Needed in the Definition & Measurement of ESG Factors
    • 1.3 Materiality & Double Materiality
  • 2.0 Factors Driving Demand for ESG products
    • 2.1 Interest in ESG Investments Rocketed in the Past Five Years
    • 2.2 Investor Demand is Driven by ESG Price Performance
  • 3.0 Regulatory Initiatives
    • 3.1 EU Regulators are Setting the Pace on ESG Classification
    • 3.2 The Sustainable Finance Disclosure Regulation
    • 3.3 Corporate Sustainability Reporting Directive
    • 3.4 The EU Taxonomy
    • 3.5 MiFID II Sustainability Preferences
    • 3.6 UK ESG Regulation
  • 4.0 ESG has Arrived: What’s Next?
    • 4.1 Table of Figures

Report Data & Figures

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