The recognition of environmental, social and governance (ESG) investing has waned after outperformance, Financial institution of America analysts mentioned in a word this week.
The analyst, head of U.S. sustainability analysis at Financial institution of America, attributes the ESG increase from 2016 to 2021 to a few elements: a worldwide regulatory push, particularly in Europe; rising investor demand, particularly from millennials; and company ESG commitments surge.
Nevertheless, Financial institution of America highlighted a decline for the reason that 2021 peak. Analysts blame laws, greenwashing accusations, vitality safety considerations and U.S. political pushback.
U.S. ESG fund belongings have decreased from US$17 trillion in 2020 to US$8 trillion in 2022, and capital outflows will proceed in 2024.
Regardless of the financial slowdown, Boffa believes ESG stays vital. U.S. laws require some corporations to undertake ESG insurance policies, whereas European laws nonetheless have an effect on U.S. corporations in search of European capital.
Financial institution of America additionally believes the ESG knowledge market is fragmented, with MSCI, Sustainalytics and ISS dominating the market, however there are additionally many area of interest gamers.
