Greenwashing is a key concern for asset owners, with asset managers “overstating or providing unclear messaging” on their level of commitment to sustainability, according to Cerulli’s latest white paper, Global State of ESG.
The white paper surveyed 210 institutional investors comprised of pension funds, insurers and endowments and foundations, with asset under management ranging from €500 million to over €6 billion. Around 57% had AUM tween €1 billion and €5 billion.
The report found 58% of European asset owners flagged greenwashing as a main issue while an additional 46% of asset owners noted that an ESG product’s investment policy allows for a significant proportion of non-sustainable investments.
Moreover, 20% pointed to misleading claims about product’s ESG-related results.
Cerulli’s research also revealed 73% of US respondents believe the Securities and Exchange Commission should be responsible for setting standards around both public companies’ ESG disclosures while 85% of European institutional investors are in favour of fining asset managers that engage in greenwashing practices and only 7% are not.
In addition, fears of negative returns and the perception that performance may be sacrificed in the name of ESG/sustainability continue to be a major challenge to firms when it comes to marketing their strategies.
Despite this, Cerulli notes managers are forging ahead with product development, sales, and marketing of ESG products.
“Overall, Cerulli’s research reflects an industry largely unswayed by negative rhetoric surrounding the topics and concepts related to ESG investment,” says David Fletcher, associate director.
He adds, “By and large, sustainability and the overarching themes of ESG investment are already ingrained in the asset management industry. The challenges firms face in implementing ESG investment initiatives are pain points that will likely be viewed in retrospect as necessary steps in the legitimization and long-term success of these goals.”
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