The European Sustainable Investment Forum (Eurosif) has said it will exclude from its next tally of the continent’s sustainable investing market those asset managers offering hard-to-define strategies around ESG.
Speaking to Bloomberg earlier this week, Eurosif said it was revising its methodology, given the size of the market, which previous estimates from the forum have put at $12tn (€11tn).
Bloomberg reported: “Eurosif had been due to provide a revised estimate for 2022. But the review is now expected to be ready later this year as the group finalises the new methodology, [chairman Will Oulton] said. The delay comes amid mass downgrades that have repeatedly hit fund managers offering strategies built on environmental, social and governance metrics on stricter regulatory guidance.”
It added the forum was now working with a professor from the University of Hamburg to develop a new methodology. That professor, Timo Busch, said Europe’s sustainable investing market may only be half the size it was previously reported to be.
Five categories of ‘sustainable’
“Busch’s system focuses on whether an ESG strategy actively supports the transition toward a more sustainable economy,” said Bloomberg. “He divides the market into five categories: exclusions-focused investments, basic ESG investments, advanced ESG investments, impact-aligned investments, and impact-generating investments. Only the latter three qualify as sustainable investments under the draft framework.”
All this comes against a backdrop where ESG is said to be becoming a “growing concern” among fund selectors. A recent report from Broadridge said ‘green’ credentials were more coveted than ever before by European fund selectors. And in March, Expert Investor Europe reported Fitz Partners claiming the number of fund products with the label ‘ESG’ jumped almost 90% in 2022.
While ESG investing is looking to save the world, some others have identified opportunity in defending it, as Wednesday saw the launch of the VanEck Defense Ucits ETF, the first defence-oriented ETF in Europe. According to the Financial Times, this ETF is available on the London Stock Exchange and Deutsche Borse’s Xetra, with plans to list on Switzerland’s SIX and Borsa Italiana. According to VanEck, the fund is domiciled in Ireland, with net assets of $1m.