European and UK investors are comfortably outstripping their Stateside counterparts on sustainable investing with more “mature” green investment strategies, new research has revealed today.
Some 73 per cent of European asset managers said they are now using an environmental, social and governance (ESG) framework in their investment strategy, while over 70 per cent are now offering impact investment strategies, according to new data from investment analysis firm Pitchbook.
US firms have been left languishing behind with a more immature approach to sustainable investment, the research found. Just 56 per cent of investors have deployed ESG frameworks in their investments while six in ten investors are offering impact strategies to clients.
Analysts at Pitchbook said that increasing regulatory scrutiny on this side of that Atlantic had spurred investors into action in the past two years.
“With the Sustainable Finance Disclosure Regulation (SFDR) introduced in 2019 and taking effect in 2021, European entities have been facing a push to formalise and legitimise sustainable investing programs,” said Anikka Villegas, fund strategies and sustainable investing analyst.
“Preparation for compliance with the regulation began when it was introduced, fitting into the two-to-five-year window, likely influencing when many European respondents would consider the inception of their formal programs.”
UK regulators have been among those looking to ramp up the quality of environmental data coughed up by investors in a bid to hold firms to account on emissions.
The Financial Conduct Authority in December last year moved to require more detailed climate related-disclosures from asset managers in line with international standards set by the Taskforce on Climate-related Financial Disclosures (TCFD).
London’s firms have been leading the charge for green finance globally as government and regulators tighten the screws on inaction on sustainability, according to closely watched index this year by think tank ZYen.
The Capital retained its place at number one as the top global city for finance, with six other European Western European cities sitting in the top ten alongside three US centres.
London Stock Exchange officials have also been looking to boost the appeal of the capital as a place for green firms to list and raise capital. So-called Green Mark London-listed funds and firms now boast a combined value of more than £148bn, according to London Stock Exchange data.