ESG rules, opportunities on radar of European asset managers
SFDR’s reporting requirements and the data necessary are a continuing focus for quant manager TOBAM, said Tatjana Puhan, Zurich-based deputy CIO and co-head of research. Executives at the $10 billion money manager are pleased that “things have now been spelled out concretely and we have explicit definitions and guidelines that we can apply rather than very broad and unclear definitions,” under SFDR. However, Ms. Puhan added that areas remain where more concrete guidance is needed, but did not elaborate further.
In summary, “the EU’s ongoing recalibration and specification of its ESG rule framework will keep us busy,” said Bjoern Jesch, global CIO at DWS Group in Zurich. The firm has €833 billion in assets under management.
And while money manager Franklin Templeton is focusing on SFDR’s continued implementation, executives are also preparing for the U.K. ESG regulation that is “being firmed up in the summer of 2023,” said Matthew Williams, London-based head of sales EMEA. Franklin Templeton has $1.3 trillion in assets under management.
In October, the U.K.’s Financial Conduct Authority proposed anti-greenwashing rules with new categories of investment fund labels for fund managers and restrictions on how terms like “ESG,” “green” or “sustainable” can be used.
Beyond regulation, managers are also looking to expand their products, including exchange-traded funds and alternatives.
DWS has “a couple of projects we want to push in 2023,” Mr. Jesch said, including expanding the footprint of its exchange-traded fund products, Xtracker, in the U.S., and increasing its alternatives offerings. The firm’s alternatives assets under management accounts for about 15% of the total €833 billion.
Growing interest in “the role active ETFs can play in portfolios and continued appetite for alternatives in helping to diversify portfolios, including the role of timber as an asset class, are several examples of interesting industry developments and current areas of focus for us,” said Patrick Thomson, London-based EMEA CEO at J.P. Morgan Asset Management. The firm has more than $2.5 trillion in assets under management.
Investment in technology is also in the cards for DWS and JPMAM, Messrs. Jesch and Thomson added.
“Technology will underpin success across these areas (of development and focus for JPMAM) and elsewhere. Technology investment is critical for asset managers to improve the overall client experience and create solutions that meet increasingly complex client needs. Recent times have reinforced the importance of investment in technology and accelerated digitization. We believe it will be a key source of differentiation and enable firms to operate at scale, speed and with efficiency,” Mr. Thomson said.