EMC Working Papers

A closer look at ESG investing

Halfway between traditional philanthropy and return-driven financial investment, ESG investing – i.e. directing capital to companies which yield environmental, social and governance benefits in addition to profits – enables investors to “do well by doing good”. Lying within the broad range of responsible investments, ESG can be virtually any asset class or investment vehicle.

First coined in the 1960s in reference to the portfolio exclusion of companies involved in tobacco production or the South African apartheid regime, ESG investments are nowadays part of an exponentially growing market, fuelled by the rising public awareness of climate change and the diversification benefits it provides. The PWC’s 2022 report on European mutual funds, The Growth Opportunity of the Century, estimates the size of the European ESG market at €1.7 trillion in 2019 with an estimated CAGR of 14.3%, almost twice as much as non-ESG investments’ CAGR (7.6%). In 2019, ESG assets were accounting for more than 15% of total assets held in European mutual funds. Other estimates forecast that ESG mandates will govern 95% of total managed assets by 2030

Research Topics: Sustainability and Corporate Social Responsibility Climate Change and the Environment