Asset owners and managers maintained their focus on environmental, social, and governance (ESG) initiatives, despite increased regulatory scrutiny and concerns over "greenwashing," says Cerulli Associates.
Asset owners and managers maintained their focus on environmental, social, and governance (ESG) initiatives, despite increased regulatory scrutiny and concerns over "greenwashing," says Cerulli Associates.
Its ‘Global State of ESG’ study revealed that while firms acknowledged and addressed skepticism, they remained committed to their established courses of action. Investment funds claiming to be ‘green’ or sustainable without meeting established categorization standards face greater scrutiny as the industry seeks to address the issue of greenwashing.
Cerulli's findings indicate that both U.S. and international asset managers welcomed the opportunity for greater clarity. The majority of U.S. asset managers surveyed believed that the Securities and Exchange Commission (SEC) should be responsible for setting standards regarding both public companies' ESG disclosures (73%) and asset managers' ESG standards and product definitions (58%). Meanwhile, 85% of European institutional investors supported imposing fines on asset managers engaged in greenwashing practices, with only 7% opposing such measures.
Moreover, concerns regarding negative returns and the perception that performance may be compromised in pursuit of ESG/sustainability goals continue to present challenges for firms in marketing their strategies.
"Overall, Cerulli's research reflects an industry largely unaffected by negative rhetoric surrounding ESG investment," said David Fletcher, associate director at Cerulli. "Sustainability and the broader themes of ESG investment are already deeply ingrained in the asset management industry. The challenges faced by firms in implementing ESG initiatives are likely to be viewed as necessary steps in legitimizing and ensuring the long-term success of these goals."
