European ESG Fund Report
PwC released the European ESG Fund Report, which aims to help stakeholders in the asset management industry track the development of ESG products and analyze the impact of Sustainable Financial Disclosure Requirements.
PwC believes that ESG has become a core issue in the asset management industry. Regulatory policies, the excess returns of ESG funds, the demands of investors and environmental and social crisis are important factors for asset management companies to incorporate ESG into investment decisions.
Overview of European ESG Fund
By the end of 2022, there are 24,347 UCITS in Europe, of which 10,154 are ESG funds, accounting for 41%. Among these ESG funds, 9175 belong to Article 8 funds, and the other 979 belong to Article 9 funds. PwC estimates that the current total size of ESG funds is 5.1 trillion euros and may reach 7.9 trillion euros in 2025.
Among the asset classes involved in ESG funds, stocks and bonds account for the highest proportion. Among Article 8 funds, stock funds accounted for 42%, bond funds accounted for 25%, and the rest were mixed funds (14%) and currency funds (19%). Among Article 9 funds, stock funds accounted for a higher proportion, reaching 74%.
In terms of fund management types, most ESG funds tend to be actively managed. Among Article 8 funds, active management funds accounts for 89%. Active management accounts for 84% of Article 9 funds. The higher proportion may be related to the current small number of ESG indexes. As some index companies are launching ESG-related indexes, the proportion of passive management may increase.
Related Post: Index Industry Association Releases a ESG Report on Asset Management Industry
In terms of ESG fund domiciles, Luxembourg ranks first, with 3,892 Article 8 funds and 492 Article 9 funds, reaching a total ESG asset size of 2.4 trillion euros. France, Ireland and Sweden are also common domiciles for ESG funds, but their combined size is still smaller than that of Luxembourg.
In terms of European ESG fund distributions, ESG funds registered in Luxembourg mainly distribute to investors in Germany, Switzerland, Austria, France, Italy, Spain and other regions. ESG funds registered in Ireland mainly distribute to investors in the UK, Germany, Switzerland, Austria, France, Finland and other regions.
In terms of net flows in European ESG funds, Article 8 funds had a total outflow of 52.6 billion euros, and Article 9 funds had a total inflow of 20.9 billion euros. This phenomenon stems from the fact that regulatory policies tightened the classification of ESG funds in the second half of the year, and some Article 8 funds were excluded from the category because they did not meet the requirements. Regarding the adjustment, 1,481 were newly established and 7,694 were adjusted in Article 8 funds. 327 were newly established and 652 were adjusted in Article 9 funds.
ESG Asset Management Companies and ESG Funds
In terms of European asset management companies, BlackRock, Amundi, and DWS occupy the top three of Article 8 funds, with a combined management scale of 822.6 billion euros. In terms of Article 9 funds, Amundi, Candriam and Mirova have the largest number of ESG funds, while Pictet, Candriam and Handelsbanken have the largest ESG management size, reaching 66.9 billion euros.
| Article 8 by AuM | EUR Billions | Article 8 by numbers | Numbers | Article 9 by AuM | EUR Billions | Article 9 by numbers | Numbers |
| BlackRock | 378.8 | Amundi | 451 | Pictet | 25.0 | Amundi | 33 |
| Amundi | 269.7 | BNP Paribas | 254 | Candriam | 21.9 | Candriam | 30 |
| DWS | 174.1 | DWS | 242 | Handelsbanken | 19.9 | Mirova | 27 |
| BNP Paribas | 172.6 | Eurizon AM | 203 | BNP Paribas | 16.3 | AXA IM | 22 |
| Goldman Sachs | 166.6 | BlackRock | 191 | Amundi | 16.0 | CPR AM | 20 |
In terms of single European ESG funds, the largest Article 8 fund reached 61.5 billion euros, while the largest Article 9 fund was 9.5 billion euros. In terms of the net inflow of a single ESG fund, the Article 8 fund (60.8 billion euros) is also significantly higher than the Article 9 fund (1.5 billion euros).
| Article 8 | Promoter | AuM Billions | Article 9 | Promoter | AuM Billions |
| LGIM Sterling Liquidity 4 | Legal& General | 61.5 | Nordea 1 – Global Climate and Environment | Nordea | 9.5 |
| BlackRock ICS US Dollar Liq Core | BlackRock | 55.9 | Pictet Water – P | Pictet | 8.0 |
| BlackRock ICS Sterling Liq Core | BlackRock | 53.0 | Pictet Global Environmental Opportunities – P | Pictet | 7.3 |
| Amundi Euro Liquidity SRI | Amundi | 45.7 | BGF Sustainable Energy A2 | BlackRock | 6.3 |
| BlackRock ICS Euro Liquidity Core | BlackRock | 42.7 | Handelsbanken Global Index Criteria | Handelsbanken | 5.9 |
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