KPMG has now released the 3rd edition of the ALFI/KPMG European Responsible Investing Fund Survey.
It is great to see the results of this survey reflecting a growth and dynamism of this sector and that product innovation and a set of promising opportunities – such as the development of green and social bonds – have been highlighted.
The survey offers a quantitative analysis of the development of the RI fund market, in addition to the qualitative findings resulting from a number of interviews carried out with RI market players.
It is clear that asset managers today can no longer choose to ignore the RI market segment.
Asset managers are increasingly being challenged on their approach to responsible investing and must be prepared to answer questions from their stakeholders around this topic. Failure to anticipate and act upon these questions is likely to result in chances missed and business lost. As investors display an ever-growing demand for RI products, emphasis is being placed on Environment, Social and Governance (“ESG”) matters and well-implemented responsible investing strategies and related processes.
Investors are becoming more and more demanding. Due to younger generations being ever more critical of unethical behavior, investors are beginning to expect social and ethical responsibility in all aspects of corporate operating practices. Hence, there is a growing acceptance among asset managers and investors about the importance of ESG factors to investment returns. Many institutional investors are no longer prepared to work with asset managers which do not offer RI products. We have noted a number of cases of investors withdrawing mandates from asset managers with limited or no responsible investing policy and process. RI market players are systematically confirming that this stance taken by institutional investors is by far the biggest driver of RI market growth.
The RI industry continues to be challenged on the one hand, however, we also see great opportunities, in addition to product innovation, emerging. The most important of these emerging opportunities and challenges are explored in our study.
The survey also explores the competitive advantages that some RI specialists already have in addressing the expectations of the investor of tomorrow – areas such as transparency, integrity, strong brand and innovative products – and these are areas where the RI sector is already well ahead of the average asset manager. What remains to be seen is whether the RI sector will be able to see and seize future opportunities.