Sustainable investment in Europe has become a structural part of the industry. According to the latest report, *”Sustainable Equity UCITS: Promoting Sustainable Business Models”*, published by the European Fund and Asset Management Association (EFAMA), the growth of sustainable equity funds has surged over the past five years.
The report highlights that sustainable equity UCITS represented 24% of the total sustainable funds in the European industry in 2023, compared to 15% in 2019. A significant finding is that the net assets of these vehicles have more than doubled over the past five years, increasing from €0.6 trillion to €1.3 trillion.
Moreover, despite market volatility and economic uncertainties, EFAMA notes that sustainable equity UCITS have shown resilience, with positive net inflows, particularly in 2021 when net inflows reached €231 billion. “Although net inflows were smaller in 2022 and 2023, demand for these funds remained strong compared to global trends, underscoring investors’ confidence in sustainable investments,” they point out.
The report also states that nearly 20% of sustainable equity UCITS are classified as Article 9 funds, while 70% are Article 8, reflecting cautious sentiment among investors due to regulatory uncertainties. The ongoing review of the Sustainable Finance Disclosure Regulation (SFDR) is expected to provide clearer definitions and support for transition finance.
On average, sustainable equity funds have consistently delivered positive net returns, comparable to non-sustainable equity UCITS. These funds tend to be profitable, benefiting investors with sustainability preferences.
“Sustainable equity UCITS not only encompass a wide range of sustainability themes tailored to diverse investor preferences but are also a resilient investment product with competitive returns. This makes them an attractive option for investors,” explains Vera Jotanovic, Senior Economist at EFAMA.
According to Anyve Arakelijan, Policy Advisor at EFAMA, as the regulatory landscape evolves, “we expect the sustainable finance framework to become more investor-focused, resolve inconsistencies with other EU regulations, and provide greater support for transition finance, further driving sustainable progress and achieving the EU’s long-term sustainability goals.”
For Amaya Uriarte