Investment in sustainable assets rises in Europe in 2020

Investment in assets following ESG (Environmental, Social and Governance) criteria rose in 2020 and is expected to continue rising in the following years, said Europe’s investment management industry body, EFAMA, on Thursday.

In December 2020, net assets of ESG funds amounted to €1.2trn.

While non-ESG funds saw a growth in net assets of only 4.8% in 2020, ESG funds recorded a growth rate of 37.1%.

Based on Morningstar data, there were 2,873 ESG funds in December 2020 and 25,718 non-ESG funds.

ESG equity funds were less exposed to sectors that were the hardest hit by the Covid-19 pandemic, such as energy and financial services, the EFAMA said.

The number of ESG UCITS (a mutual fund in the European Union) has risen at a steady rate over the last five years in response to the ever-growing demand for sustainable investing.

The latest report from EFAMA said that policymakers in Europe, in particular, had adopted a wide range of initiatives to increase the flow of investments towards sustainable economic activities and projects.

During the last five years, the number of ESG funds has grown at more than double the pace of non-ESG funds.

Regarding the type of investments, equity funds are the most dominant ESG fund type, representing 56% of the overall ESG fund universe in December 2020, followed by bond funds (16%) and multi-asset funds (15%).