Two-thirds of European asset managers plan to stop product launches

Over two-thirds of European asset managers and distributors are considering halting the launch or distribution of products that do not meet the environmental, social and governance ESG standards, according to a survey by PwC Luxembourg on Monday.

In the past few years, flows into ESG funds have risen due to a growing regulatory focus on issues such as climate change, as governments try to push more money into activities that can help meet their net-zero emissions goals.

The PwC survey of 3,354 respondents showed ESG assets in Europe could grow to between 7.4 trillion euros and 9.0 trillion euros $7.8 to $9.5 trillion by 2025 and account for up to 56% of total European mutual fund assets, against 37% at the end of last year.

More than 60% of European asset managers plan to halt all non-ESG product launches by the end of 2024, according to PwC, which forecasts long-term challenges for asset managers that maintain a hybrid ESG non-ESG product range.

Private and retail banks, as much as 68% plan to cease their distribution of non-ESG products within the next two years, over half of which are planning to do so, according to the survey.

As regional regulations become more stringent and as efforts towards the development of global ESG standards intensify, managers especially those who are willing to compete at a global level will be pushed towards an all-encompassing alignment of their products and services with the ESG, according to the financial services market leader at PwC Olivier Carre.