Institutional Asset Manager Newsletter 14.02.25

ESG investing stands firm in face of ‘drill, baby, drill’

Nervous times for ESG advocates as President Donald Trump authorises an onslaught of anti-renewable, pro-fossil fuel executive orders.
In addition to effectively terminating the US Green New Deal, Trump has also announced plans to "end leasing to massive wind farms", while reinforcing his promise to "drill, baby, drill".
Admittedly Trump’s rhetoric does not always translate to action – his first term was littered with unfulfilled promises – but a second term in office comes with more experience and the support of newly appointed acolytes many of whom share his anti-ESG agenda (see Elon Musk for reference).
However, it may not all be bad news for sustainable investment proponents, especially those tasked with managing assets.
According to research from Bloomberg Intelligence, ESG assets under management will reach USD35 trillion by 2030. This is a slow down on growth predicted in earlier forecasts but nonetheless suggests appetite for ESG is far from over.
Of course, the US is not – and never was – the main driver of sustainable investment inflows; that position is held by the EU, and it will be incumbent upon regulators in the Union to ensure they do not swamp market participants with unnecessary red tape if they want investors to support the green transition.
Bloomberg Intelligence’s director of research and chief ESG strategist, Adeline Diab, warns that should regulatory frameworks bring confusion, inflows to ESG will be far lower than currently forecast.
In other news, research reveals fund administrators are running to catch up with the voracious demand for private markets investment.
A survey from Accelex and FactSet finds that 55 per cent of fund administrators consider data acquisition and data governance their primary operational challenge, compounded by the growth of private markets particularly along retail investors.
These trends, according to the survey, have increased data volume, complexity and reporting demands.
The logical solution would be to use technology to automate workflows. However, fund administrators say "poor underlying data quality issues and expedited flawed processes" are hampering their efforts.
Michael Aldridge, President and CRO of Accelex, recommends fund administrators turn to artificial intelligence for help.
"AI-driven data governance empowers administrators to build trust, foster transparency, and position themselves as leaders," he argues.
Presumably firms will have to believe that the data used to inform these revolutionary AI solutions is of high enough quality to help tackle the problems they already face.

Gill Wadsworth, Editor, Institutional Asset Manager
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