Bank of America (NYSE:) analysts say in a recent report that the popularity of environmental, social and governance (ESG) investing has declined after a period of significant growth.
Bank of America’s Head of US Sustainability Research cites three main reasons for the surge in interest in ESG investing between 2016 and 2021: a strong regulatory push around the world, with a focus on Europe; an increase in the number of investors who want this type of investment, especially among the younger generation; and a notable increase in the number of companies that make commitments to ESG principles.
However, Bank of America sees a decline from the peak of 2021. Analysts point to stricter regulations, accusations of misleading claims about environmental benefits, issues related to security of energy supply and opposition from some as causes of this decline. American politicians.
The total value of assets in US ESG funds has decreased from $17 trillion in 2020 to $8 trillion in 2022, and the decline has persisted into 2024.
Despite the recent slowdown in growth, Bank of America maintains that ESG considerations continue to be of significant importance. In the US, regulations require some companies to implement ESG strategies, and European regulations continue to impact US companies interested in attracting investment from Europe.
Bank of America also notes that the ESG data market is divided, with large companies such as MSCI, Sustainalytics and ISS having a significant presence, along with many specialized companies.
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