Published on 9 April 2024, the fifth edition of PWC Luxembourg’s found that investment flows into ESG undertaking for collective investment in transferable securities (Ucits) funds increased in 2023.
Funds classified as article 8 (those that promote environmental and/or social characteristics) and article 9 (which have a sustainable investment objective) together reached €6.2trn at the end of the year–€5.89trn for article 8 and €311.9bn for article 9. This marks an increase of €1trn year-on-year, said PWC in a press release. The combined figure at the end of 2022 stood at €5.1trn.
“Since the introduction of the Sustainable Finance Disclosure Regulation (SFDR) in 2021, sustainable finance investments have skyrocketed and continue to do so, as evident from the €1trn jump we’ve seen in AUM [assets under management] in article 8 and article 9 Ucits funds, reaching €6.2trn in end-2023,” Frédéric Vonner, partner and sustainable finance & sustainability leader at PWC Luxembourg, commented in the communiqué. “We do not expect this growth to slow down anytime soon, and now project ESG Ucits AUM in the EU to reach €9.4trn by 2027.”
Vonner added, “With the ongoing review of the SFDR, investors can expect even greater clarity and standardisation in the years to come, which may further propel the growth of sustainable investing in the EU.”
Here are a few takeaways from the report.
Luxembourg “leading domicile” for ESG funds
The grand duchy is “by far the leading domicile” when it comes to ESG funds in the European Union, said PWC in its press release. It has 45.7% of the total assets under management of article 8 funds. Luxembourg, with more than €2,693bn in AUM in article 8 funds, has more than double the article 8 AUM when compared to Ireland (€1,269bn).
And with €189.6bn, Luxembourg has 60.8% of the total assets under management of article 9 funds. Ireland is in a distant second place (€30.4bn), followed by Sweden (€29.2bn) and France (€24.9bn).
There were 10,481 article 8 funds as of the end of 2023, 963 funds classified as article 9 and 12,566 other funds. That makes for a total of 24,010 funds.
“Growing interest” in money market funds, ETFs
The latest data from PWC shows a shift towards more “diversified” strategies, said PWC, including money market funds and exchange-traded funds (ETFs).
“While equities remain dominant, we see growing interest in article 8 money market funds and passive options such as article 8 and article 9 ETFs, which now represent 24.4% of the total AUM of EU ETFs,” noted Vonner. The combined AUM of article 8 and article 9 exchange-traded funds came to €367.2bn at the end of 2023, an increase of 59% compared to 2022.
Among the 1,774 exchange-traded funds at the end of 2023, 608 of them were classified as article 8, 66 of them were article 9 and the remaining 1,100 were “other” funds.
Blackrock, Pictet, Amundi, Candriam top asset managers
When looking at the ESG assets under management of different asset managers, Blackrock had the highest amount of article 8 AUM (€432,6bn), while Pictet had the highest amount of article 9 AUM (€25.0bn)
By number of funds, Amundi (521 funds classified as article 8) and Candriam (30 funds classified as article 9) took the top spots.
Find the full poster .
