Despite the challenges environmental, social, and governance (ESG) investing has faced in 2022, asset managers across Europe still regard ESG marketing as a key feature of their overall marketing efforts, as well as a powerful sales booster in the long term, according to the latest issue of The Cerulli Edge―Global Edition.

This year, the short-term credibility of ESG has been questioned in Europe, prompted by the recent high market volatility and heightened regulatory scrutiny.

However, despite these challenges, 49% of the asset managers across Europe that Cerulli surveyed consider ESG marketing a very important feature of their overall marketing efforts. Looking ahead to the next 12 to 24 months, 76% believe that the importance of ESG to their marketing efforts will grow.

“An average of 48% of the managers in the largest European fund markets believe that ESG capability is an important enabler of sales and 75% of respondents intend to focus on increasing their production of ESG marketing materials over the next 12 to 24 months,” says Fabrizio Zumbo, director, European asset and wealth management research at Cerulli.

Asset managers’ sales departments are thinking the same way: 51% of the sales executives view the need for a strong ESG proposition as a very important driver of change within sales teams, and 47% said ESG capability is a key topic they have discussed with clients this year.

When it comes to ESG-related themes, 41% of the asset managers plan to promote energy efficiency in their ESG-focused marketing efforts over the next 12 to 24 months. Another 39% will focus on climate change and carbon emissions.

Investors’ lack of financial awareness remains a challenge, particularly for asset managers targeting a retail audience. “Managers that can combine clear and tailored ESG-related communication with strong compliance and reporting features will stand out in the long term,” says Zumbo. “Managers targeting a retail audience should allocate more resources to providing financial education and marketing campaigns to increase investors’ awareness of topics such as the importance of the energy transition, reducing carbon emissions, and investing in line with the UN’s Sustainable Development Goals.”

Investing based on the narratives behind products is continuing to gain traction in Europe and sustainable thematic products, which sit at the intersection between ESG and thematic investing, have seen increasing demand from retail investors across the region. “Creating strong narratives that link financial products to sustainable megatrends and sharing them via marketing campaigns in different channels can create opportunities for managers. Managers should consider enhancing their communications on corporate sustainability, ESG fund metrics and performance, and impact and compliance reporting to boost their ESG pedigree,” says Zumbo.

Other Findings:

• For 75% of the asset managers in the U.S., the perception that ESG is politically motivated is a moderate challenge to increasing client receptiveness to ESG issues, up from 49% in 2021. To overcome investor skepticism, managers should discuss the merits of ESG and sustainable investing with their clients, highlighting how and why they are using ESG data to drive long-term economic value.

• Asian portfolios are, to some extent, more focused on regional assets and their respective local securities. This focus has sheltered Asian portfolios from the Russia-Ukraine war. Some 88% of the Asian asset owners Cerulli surveyed feel market movements caused by the war are either limited or have short-term return implications that are recoverable. More than half (58%) of respondents said the war has not had much impact on their ESG portfolios.