The report, which looked at assets in dedicated ESG mutual funds, ETFs, institutional mandates and private funds, suggested that assets will hit £8trn “today”, with asset management firms in line to bag up to $9trn in net new flows.
It stated that this is a result of expanding opportunities through thematic strategies, climate transition and net zero solutions, and investments that offer measurable sustainability impacts.
So far this year, net flows into ESG mutual funds and ETFs have reached $577bn, surpassing the 2020 full-year total of $355bn.
ESG strategies accounted for just 11% of overall mutual fund and ETF assets but captured 30% of inflows during the 12 months through September 2021,” said Jag Alexeyev, head of ESG insights at Broadridge Financial Solutions. “While growth remains strong, the complexities and costs of ESG implementation have risen, and fund selectors have begun to ask harder questions.
“In addition, greenwashing has emerged as a key reputational risk that firms must address. Improving a manager’s sustainable investment capabilities, enhancing transparency, and amplifying communication of results can help establish credibility and strengthen client relationships.”