ESG & Investing
Fund Managers Brace for ESG Correction With $4 Trillion at Stake
After well over $125 billion of ESG fund downgrades, asset managers are likely facing a new round of upheaval.
A coal-fired power plant in Peitz, Germany.
Photographer: Krisztian Bocsi/BloombergThis article is for subscribers only.
Asset managers are trying to digest new regulatory proposals that have the potential to upend Europe’s biggest ESG fund category.
A plan by Europe’s markets watchdog, ESMA, to set quantifiable ESG and sustainable investing standards is forcing portfolio managers to rethink how they design and market an ESG fund class known as Article 8. Morningstar Inc. estimates that only 18% of Article 8 funds, which hold about $4 trillion of assets, currently meet the watchdog’s proposed threshold for sustainable investments.