Environmental, social and corporate governance May Surpass $41 Trillion Assets in 2022

Global ESG assets may surpass $41 trillion by 2022 and $50 trillion by 2025, one-third of the projected total assets under management globally, according to a new report by Bloomberg Intelligence (BI). This trend continues the rise of ESG assets after they surpassed $35 trillion in 2020.

Adeline Diab, Director of Research ESG at Bloomberg Intelligence said: “While ESG investing has gained traction by becoming mainstream and even mandatory in certain jurisdictions, it does not come without challenges. Scrutiny is going play an important role as regulators tackle the risk of greenwashing.”

According to BI, ESG assets surpassed $35 trillion in 2020, up from $30.6 trillion in 2018 and $22.8 trillion in 2016, to become a third of the total global assets under management, according to the Global Sustainable Investment Association, in line with Bloomberg Intelligence’s base-case scenario. The report highlights that, assuming 15% growth, a third of the pace of the past five years, ESG assets could exceed $41 trillion by 2022 and $50 trillion by 2025.

Europe accounts for half of global ESG assets and dominated the market until 2018. The U.S., however, is taking the lead with more than 40% growth in the past two years and is expected to exceed $20 trillion in 2022, even if its pace of growth halves this year.

ESG exchange-traded funds’ (ETFs) cumulative inflows surpassed Bloomberg Intelligence’s projected $121 billion in 2021 based on their bull-case scenario, with over $75 billion recorded in the first half of the year. According to the report, the pace isn’t slowing, with investments in ESG ETFs expanding for more than 38 straight months.

Adeline Diab added: “The trend of growing ESG ETFs is in line with our bull-case scenario, which assumes a 35% growth, and we expect $1.3 trillion entering such ETFs globally by 2025. ESG ETF cumulative assets reached over $360 billion in 2021. While this represents almost 4% of global ETF assets, ESG has grabbed over 10% of the global ETF flows in 2021. Though Europe dominated ESG ETFs so far, the U.S. have led the wave of expansion.”

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