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A Critical Look at the ESG Market
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A Critical Look at the ESG Market

Agnes Sipiczki
CEPS, 2022
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Environmental, social and governance (ESG) investing has moved from a remote corner of the investment horizon into the mainstream. Yet for all its progress, the sector faces critical challenges, notes consultant Agnes Sipiczki in this informative essay on the European ESG experience. She analyzes the problems of information asymmetry, high fees, and a lack of transparency and comparative data, and she calls for professional investors and regulators to take the lead in developing and maintaining a global set of standards that will allow the sector to grow.

Summary

Environmental, social and governance (ESG) investments have become a significant asset class in Europe. 

The number of European ESG funds grew markedly between 2020 and 2021, and assets under management had inched over the threshold of €100 billion (approximately $107 billion) at the end of 2020 and kept climbing. Recent research shows that the returns from these investments meet or exceed those from traditional assets, so investor interest in sustainable business models is increasing.

The European Union’s 2030 environmental objectives call for nearly half a trillion more euros of green investment annually. The private...

About the Author

Agnes Sipiczki is a former CEPS research assistant and presently a consultant at FTI Consulting. 

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