Poland’s stock exchange last year initiated a responsible investment drive and Grzegorz Kaliszuk of AgioFunds illustrates the journey ahead for the Polish ESG mutual funds market.
Poland is still just at the very beginning of the road towards a more substantial level of ESG investment, but a step forward was taken in August last year when the Warsaw Stock Exchange started to publish an index dedicated to companies that observe ESG criteria. The WIG-ESG (formerly the Respect Index) has a 10-year history.
Yet currently there are only two investment management companies on the Polish market that have the ESG ‘emblem’ in their offering and between them they manage four ESG funds.
NN Investment Partners TFI offers the NN Global Responsible Investment Fund, the NN Polish Responsible Investment Fund and the NN Responsible Investment Index FIO Fund. Another asset management company, PKO TFI, markets the PKO Global Ecology and Social Responsibility Fund.
The total value of assets accumulated in these four funds at the end of 2019 amounted to 1.7 billion Polish zloty (€373 million), which is just 0. 6% of all assets in Polish investment funds.
The share of ESG funds globally already reaches 15%, or 25 times more than in Poland.
ESG funds have clearly gained in popularity at the international level among investors, asset managers, and also corporations, who are far more aware today of the need to observe ESG principles. Over 85% of the companies included in the S&P 500 index report ESG criteria, according to Credit Suisse calculations.
The global value of ESG funds at the end of 2019 was over $35 trillion - an average annual growth of 7% over the previous four years, according to Opimas. Bank of America estimates the value of the market will grow by another $20 trillion to $55 trillion over the next two decades. Assets in responsible investment vehicles are estimated to account for 15% of assets in globally managed funds.
Looking at the geographical distribution of the assets in ESG funds, Europe is a clear leader with 47% of assets considered as ‘ESG’. With 40% of assets, the US is trying to catch up. Australia and New Zealand account for another 7%, while Japan accounts for 6% of ‘responsible’ assets.
In fixed income, Moody's has said the value of ESG debt funds globally in 2019 reached around US$200 billion, up from just over $2.5 billion in 2012. The main factor why the debt market is not matched by the equity market is the low availability of data and ratings for corporate bonds, especially for emerging markets.
Within the global landscape of ESG investing, Poland still has a lot to do. The WIG-ESG index will help force the topic. But growth will also be fostered the Association of Stock Exchange Issuers and the Chamber of Fund and Asset Managers, who are also actively promoting the philosophy of responsible investment in Poland.
*Grzegorz Kaliszuk is head of sales at AgioFunds TFI in Poland.
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