Europe Driving The Bulk of Alternative ESG Fund Increase

Assets that happened to be held in alternative environmental, social, and governance- ESG funds saw an increase to $92 billion from $29 billion between 2020 and 2022, as per Preqin, with European companies driving the bulk of it.

Findings that came out of Preqin’s yearly ESG in Alternatives report inferred that alternative investors are increasingly flocking to impact strategies as well as ESG.

It is well to be noted that Europe-based strategies got 79% of the capital that was raised in three-fold increases to 2022, which was then followed by 14% when it came to North America and 7% in the case of Asia.

In the scenario of asset classes, the infrastructure funds took the limelight in 2021 and secured $39 billion, thereby overtaking $26 billion of private equity. Apparently, the average size of the equity funds also saw a surge from $400 million which was witnessed in 2017 to almost $600 million in 2022.

Impact investing, on the other hand, also got coverage in the report. The average capital raised for impact investing saw a doubled investment from $13 billion that was witnessed in 2021 to around $34 billion in 2022.

In spite of a recent surge in Europe as a market when it comes to ESG investment within alternatives, the continent has fallen behind the impact investment of North America. Across the last decade, North America raised 59% of capital in impact investing, vis-à-vis 37% raised by Europe and 2% raised across the Asia-Pacific region.

Besides this, Europe-based managers were found to have transparency metrics that were highest in average and median. It is well worth noting that these reports happen to be the latest developments in terms of trends that put forth the fact that asset managers happen to be leading the way ahead of their counterparts from the US. Earlier in June 2022, Linedata’s Global Asset Management Survey found out that the majority of the managers from Europe happen to be prioritising ESG, unlike the US companies.

At the same time, ShareAction, which happens to be an unofficial watchdog, found out that of the 77 largest asset managers across the world, only 10, all of whom happen to be from Europe, have committed to restricting investment in the most dangerous fossil fuels in their funds.