Products

EMARKETER delivers leading-edge research to clients in a variety of forms, including full-length reports and data visualizations to equip you with actionable takeaways for better business decisions.
PRO+
New data sets, deeper insights, and flexible data visualizations.
Learn More
Reports
In-depth analysis, benchmarks and shorter spotlights on digital trends.
Learn More
Forecasts
Interactive projections with 10k+ metrics on market trends, & consumer behavior.
Learn More
Charts
Proprietary data and over 3,000 third-party sources about the most important topics.
Learn More
Industry KPIs
Industry benchmarks for the most important KPIs in digital marketing, advertising, retail and ecommerce.
Learn More
Briefings
Client-only email newsletters with analysis and takeaways from the daily news.
Learn More
Analyst Access Program
Exclusive time with the thought leaders who craft our research.
Learn More

About EMARKETER

Our goal is to unlock digital opportunities for our clients with the world’s most trusted forecasts, analysis, and benchmarks. Spanning five core coverage areas and dozens of industries, our research on digital transformation is exhaustive.
Our Story
Learn more about our mission and how EMARKETER came to be.
Learn More
Methodology
Rigorous proprietary data vetting strips biases and produces superior insights.
Learn More
Our People
Take a look into our corporate culture and view our open roles.
Join the Team
Contact Us
Speak to a member of our team to learn more about EMARKETER.
Contact Us
Newsroom
See our latest press releases, news articles or download our press kit.
Learn More
Advertising & Sponsorship Opportunities
Reach an engaged audience of decision-makers.
Learn More
Events
Browse our upcoming and past events, recent podcasts, and other featured resources.
Learn More
Podcasts
Tune in to EMARKETER's daily, weekly, and monthly podcasts.
Learn More

Predictions for ESG in 2023: Stronger regulations and intensifying competition will fail to end sustainable investing boom

The predictions: The rise of environmental, social, and governance (ESG) investing has continued in 2022 due to surging consumer demand which is helping to accelerate uptake among banks and money managers.

We take a look at what the next year could hold for sustainable finance and ESG.

The ESG investing boom will accelerate, but the sustainable fund market could shrink. As investors, asset managers, and banks recognize the value in ESG, more will prioritize it.

Financial institutions recognize that much of the labor force want to work for firms with strong ESG policies and that consumers also care: One in four said they’d leave their bank over poor environmental and social track records, per Kearney data.

For asset managers, swelling client demand for ESG products will keep sustainable investing as a priority and drive growth through 2025. And green investing is likely to gradually mature in the coming years as a “generational shift” in wealth management occurs.

However, stronger scrutiny of ESG will force some asset managers to reevaluate funds’ labels, causing the overall market to contract. And fears of being accused of greenwashing will force banks and FIs to exercise caution around how they market new funds—meaning total ESG products could decrease despite rising demand.

Stronger oversight is coming. Regulatory pressures around ESG are building on both sides of the Atlantic.

  • In the US, the Securities and Exchange Commission (SEC) has been cracking down on misleading ESG claims, including a $4 million fine for Goldman Sachs and $1.5 million penalty for BNY Mellon. Expect this to continue in the run up to more concrete US regulatory standards on ESG, which is likely to be complicated by political headwinds.
  • New rules overseeing ESG investing in the EU were finalized in August. Confusion among asset managers about how they classify ESG products could lead to more financial punishments as watchdogs investigate possible infringements. Rules may also be amended to improve clarity.
  • New regulations are edging closer in the UK. The government this month committed to updating a Green Finance Strategy in early 2023 and to hold talks about ESG ratings providers into regulations.

More truth in labels. Banks are becoming more conscious of what they label as ESG. Lenders will be desperate to avoid the reputational and financial damage caused by fines for greenwashing as part of the SEC’s crackdown.

Asset managers are also under pressure to rethink what constitutes ESG:

  • US assets under management (AuM) totaled $8.4 trillion at the start of 2022, per US SIF. That’s less than half the $17.1 trillion reported for 2020. The sharp drop is mostly driven by stricter conditions around what is classed as ESG.
  • It’s a similar story in Europe: There’s been a surge of ESG fund downgrades after new regulations came into force. More than $100 billion in AuM is estimated to have been downgraded so far, per Bloomberg News, with BlackRock and Amundi among those reclassifying funds.

Expect more clarity from the SEC around what should be classed as ESG; it’s already proposed changes to its names rule. Regulators in the EU will also want to clean up any confusion around ESG fund labels. Banks and asset management firms will become more cautious about what they class as ESG and be forced to self-regulate to dodge the threat of watchdog punishments. This will contribute to a likely drop in total ESG AuM.

The competitive advantage that ESG gives will shrink. The edge that ESG products can generate for wealth management firms is diminishing as the trend becomes the norm: ESG assets are on pace to constitute 21.5% of global AuM in less than five years, per PwC.

Simply offering green investing won't be enough in the long term to attract and satisfy clients, although it can still give asset managers a short-term advantage. That means fund managers will be forced to differentiate through the performance of ESG funds, particularly as the bear market squeezes returns. With watchdogs and investors becoming more critical about greenwashing and growth no longer guaranteed, asset managers need to do more to prove funds’ worth.

This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.