Asset Managers Want Greater Guidance on ESG Standards and Definitions from the SEC

June 2, 2023 — Boston

This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes product trends as of April 2023 and examines the U.S. regulatory environment surrounding environment, social, and governance (ESG) investing.

Highlights from this research:

  • As of month-end April, mutual funds boast more than $17.2 trillion in assets, up 5.7% from year-end 2022, but down 0.2% from month-end January 2023. Net flows continue to be negative, with the vehicle ceding $25.2 billion in April and $86.1 billion YTD 2023. Taxable bond funds were the only asset class to accumulate positive flows during April, adding $8.0 billion.

  • Total ETF assets are hovering right under the $7 trillion mark, having increased nearly 1% over the course of April. Total net flows during the month amounted to $31.7 billion, or 0.5% organic growth.

  • Two Securities and Exchange Commission (SEC) rules proposed in May 2022, the “ESG Rule” and the “Names Rule,” both aim to curb “greenwashing” and provide investors with more transparency and clarity into ESG investments and processes. Feedback gathered during the comment period shows that asset managers generally are supportive of these rules, with a majority suggesting various modifications for improvement. Nearly three-quarters (73%) of asset managers say regulators, such as the SEC, also should be responsible for setting standards around ESG disclosures. More than half (58%) of asset managers state that regulators also should be responsible for setting ESG standards and product definitions.

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Note to editors

These findings and more are from The Cerulli Edge—U.S. Monthly Product Trends, May 2023 Issue.

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