The hosting of the UN’s climate conference later this year in Dubai, part of the United Arab Emirates, has been criticised by some who worry that the interests of the fossil fuel industry will be prioritised over the need to decarbonise rapidly. Highlighting the tensions, a group of US Congress members and Members of the European Parliament recently called for Sultan Al Jaber, the president of the climate conference who is also the head of the Abu Dhabi National Oil Company, to step down. As the charts below show, the UAE and other Gulf nations have some of the largest

The implementation of ESG criteria has put asset managers around the globe under pressure. On one hand, the industry is facing greenwashing allegations from regulators and market observers for not be strict enough with the implementation of ESG-criteria into their portfolio management processes. On the other hand, some states in the US have banned asset managers that have implement environmental, social, and governance (ESG) criteria (especially the exclusion of fossil fuel, gas, and fracking) in their portfolio management processes from managing pensions or other state-related assets. All this is happening while stakeholders from the asset management industry, governments, regulatory bodies,

It was not surprising that H1 2022 was in general a negative period for the European fund industry given the geopolitical situation in Europe, the still ongoing COVID-19 pandemic, disrupted delivery chains, rising inflation, increasing interest rates, and the sluggish market environment. Within this market environment and given the economic uncertainties, one would expect that European investors sold long-term funds and bought money market products. Therefore, it is somewhat surprising that European investors sold money market products, which are normally considered safe-haven investments. Note: As this report also covers markets outside the EU, such as the UK and Switzerland, a

A few days ago, I was asked if the Sustainable Finance Disclosure Regulation (SFDR) and the respective definitions and classifications within the EU Taxonomy are the gold standard for sustainable investing which should be used as a blue print for global regulations. My answer to this question was no. Despite the fact that I think that SFDR and the respective reporting duties under the Markets in Financial Instruments Directive II (MiFID 2) are a good starting point, I think there are still too many blind spots within the regulations which leave too much room for interpretation and may therefore lead

After the introduction of the Sustainable Finance Disclosure Regulation (SFDR) a number of investors started to use the respective classifications as selection tools for mutual funds and ETFs, since they wanted to comply with internal ESG guidelines or to ensure that they offer the right funds to their customers. Even as this approach seems to be logical and right, it may not lead to the right results. As the demand for mutual funds and ETFs classified by article 8 or 9 increased, fund promoters reacted and relabeled a number of funds, respectively, in some cases without changing the investment strategy

Transparency is one of the best ways to build trust between a customer and a corporation. Since this is quite old guidance, one might be wondering why the financial industry in general, and the fund management industry in particular, are so reluctant to offer the most transparency possible to their investors. Managing money for a client is a very sensitive task that needs a large amount of trust. This becomes especially true for sustainable investment strategies such as ESG or impact investing, because these strategies are often based on the values and beliefs of the investor. In addition to this,

As a market observer, I have seen that no other topic has got so much attention from all parts of the investment ecosystem over the course of the last three years than ESG investing. From a European perspective, it is clear that the “Action Plan on Financing Sustainable Growth” launched by the European Commission (EC) is the main driver for the increased interest from investors in ESG investing. I don’t think that ESG would still be a niche topic if the EC wouldn’t have put so much pressure on investors and fund promoters, but the launch of an action plan

Looking at the actions taken by fund managers and promoters in Europe, it seems like sustainable investing or sustainability is the hot topic in the market. Nearly every company announces that they will or have integrated non-financial criteria into their investment processes or offer funds with a specific approach. On the other hand, it looks like investors are still somewhat reluctant to integrate ESG strategies into their portfolios, even though there are high inflows into so-called ESG funds. One of the reasons for the reluctance is the fact that investors are still missing clarity on the criteria for ESG funds,

Fund managers and investors are still often confused over the definition of environmental, social and governance (ESG) investing because there is no single definition of ESG. This is despite all indications that the integration of ESG criteria in all portfolio management processes is the inevitable future of the asset management industry. In addition to the lack of a single definition, there are also several different names and acronyms, such as ESG, SRI, impact investing, sustainability etc., with many of these terms used interchangeably in the literature of sustainable investment vehicles to describe the approach of the respective product. All these