All Funds Will Be ESG Funds In 5 Years, Say Professional Investors

Published on
  • 63% of global fund buyers think all funds will incorporate ESG in five years
  • 60% have increased their focus on ESG in the wake of the pandemic
  • 50% say ESG funds tend to outperform their non-ESG counterparts
  • But 80% say greenwashing will become more prevalent as demand for ESG increases
  • And 28% think ESG represents a market bubble that will eventually burst

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2020 hedge fund letters, conferences and more

All Funds Will Soon Incorporate ESG

(London, February 2021) Two-thirds of fund buyers think all funds will soon incorporate ESG as sustainable investing gathers further momentum in the aftermath of Covid-19, new research shows.

A CoreData Research study of 200 professional fund buyers around the world found nearly two-thirds (63%) think all investment funds will incorporate ESG in five years. This proportion increases to almost three-quarters of respondents in the UK (73%) and Europe (72%). However, only half of professional fund investors in North America (50%) believe such a scenario will play out.

The survey, conducted in November and December 2020, also shows that momentum towards ESG has accelerated since the pandemic. Six in 10 (60%) global fund selectors say they have increased their focus on ESG in the wake of Covid-19. But there is wide regional disparity — eight in 10 (81%) UK respondents have raised their ESG commitment compared to less than half (42%) of North American fund selectors.

The Heightened ESG Focus

A key factor driving the heightened ESG focus is a belief that sustainable investments can help deliver superior performance. Half of global respondents (50% vs. 31% North America) say ESG funds tend to outperform their non-ESG counterparts.

“The pandemic has helped reset humanity’s moral compass and encouraged people to favor investments aligned with their beliefs and values,” said Andrew Inwood, founder and principal of CoreData. “Furthermore, there is a growing body of evidence indicating that ESG can help enhance performance and improve risk management. All of which means the ESG story has a long way to run.”

Meanwhile, a strong majority of respondents think active managers can capitalize on the rising tide of sustainable investing. Three-quarters of global fund buyers (75% vs. 69% North America) think increasing demand for ESG will benefit active funds.

Only Paying Lip Service

But as sustainable investing grows, there are concerns about companies only paying lip service to ESG. Eight in 10 global respondents (80% vs. 75% North America) say greenwashing will become more prevalent as demand for ESG increases. Concern over greenwashing is highest in Asia (88%).

The study also shows three in 10 global fund investors (28% vs. 28% North America) think ESG represents a market bubble that will burst. This belief is held most strongly by Asian respondents (50%).

“These findings likely reflect a view that there is a lot of hype around ESG rather than a belief that it is a passing trend or fad,” added Inwood. “ESG is clearly a megatrend that is here to stay.”

Key Findings

ESG Funds

About CoreData Research

CoreData Research is a global specialist financial services research and strategy consultancy. CoreData Research understands the boundaries of research are limitless and with a thirst for new research capabilities and driven by client demand; the group has expanded over the past few years into the Americas, Africa, Asia, and Europe.

CoreData Group has operations in Australia, the United Kingdom, the United States of America, Brazil, Singapore, South Africa and the Philippines. The group’s expansion means CoreData Research has the capabilities and expertise to conduct syndicated and bespoke research projects on six different continents, while still maintaining the high level of technical insight and professionalism our repeat clients demand.

With a primary focus on financial services CoreData Research provides clients with both bespoke and syndicated research services through a variety of data collection strategies and methodologies, along with consulting and research database hosting and outsourcing services.

CoreData Research provides both business-to-business and business to- consumer research, while the group’s offering includes market intelligence, guidance on strategic positioning, methods for developing new business, advice on operational marketing and other consulting services.

The team is a complimentary blend of experienced financial services, research, marketing and media professionals, who together combine their years of industry experience with primary research to bring perspective to existing market conditions and evolving trends.

CoreData Research has developed a number of syndicated benchmark proprietary indexes across a broad range of business areas within the financial services industry.

  • Experts in financial services research
  • Deep understanding of industry issues and business trends
  • In-house proprietary industry benchmark data
  • Industry leading research methodologies
  • Rolling benchmarks

The team understands the demand and service aspects of the financial services market. It is continuously in the market through a mixture of constant researching, polling and mystery shopping and provides in-depth research at low cost and rapid execution. The group builds a picture of a client’s market from hard data which allows them to make efficient decisions which will have the biggest impact for the least spend.