“Increased regulatory scrutiny and enforcement in this market is changing behaviour,” analysts at Jefferies said in the report.
Asset managers have dramatically reduced the number of new ESG funds they’re rolling out, as a tougher regulatory environment makes it harder to make claims of environmental, social and governance investing.
Reclassifications that add an ESG element to conventional funds are down 84% compared with a year ago, according to data complied by Jefferies. New ESG funds built from scratch fell 60% over the same period. Overall, the data show that the decline was most pronounced in Europe and marks the first time that reclassifying old products hasn’t led ESG fund growth.
