European-domiciled ESG assets are poised to reach a value of between €7.4 trillion and €9 trillion by 2025, according to research by PwC Luxembourg.

The research has been acquired via the accounting firm’s interactive ESG dashboard ‘The ESG Opportunity in Europe’. 

This has gathered proprietary data from 3,354 respondents across the UK, Switzerland, France, the Netherlands, Germany, the Nordics, Spain, and Italy.

This included insights from institutional investors, distributors, individual investors and asset managers. 

Alongside the anticipated ESG asset values, ESG funds will also account for between 46% and 56% of total European Mutual Fund assets, up from 37% in end-2021 data according to PwC research.

PwC stated 66% of European institutional investors plan to stop investing in non-ESG funds with a further two thirds set to do so by the end of 2023.

Investors are becoming increasingly committed to pursuing ESG funds with additional research finding 71.9% of respondents are prepared to pay a premium in order to support ESG products.

European-domiciled ESG ETF assets could surge by 2025 and hit values between €684 billion and €906 billion. 

This is a rise at a compounded annual growth rate of between 33.3% and 43%.

Dariush Yazdani, PwC’s global asset and wealth management research centre leader, commented: “As regulators and society increasingly urge investors to incorporate sustainability considerations within their investment policies and operations, managers will see a continued surge in demand for ESG products in the coming years. 

“Managers looking to seize the ESG opportunity should strive to holistically and consistently incorporating ESG across the board, viewing their entire operations through an ESG lens and adopt an all-encompassing approach to ESG, one that ranges from implementing sustainability into their product offering, all the way to assessing the sustainability metrics of their entire business structure.”

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