{"id":7312,"date":"2023-05-11T11:58:37","date_gmt":"2023-05-11T15:58:37","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/recent-esg-problems-include-fund-underperformance-and-data-inconsistency-and-how-the-us-and-europe-differ-in-approach\/"},"modified":"2023-05-11T11:58:38","modified_gmt":"2023-05-11T15:58:38","slug":"recent-esg-problems-include-fund-underperformance-and-data-inconsistency-and-how-the-us-and-europe-differ-in-approach","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=7312","title":{"rendered":"Recent ESG Problems Include Fund Underperformance And Data Inconsistency\u2014And How The US And Europe Differ In Approach"},"content":{"rendered":"
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Some fractures are appearing in global ESG investment, with market size estimated by Bloomberg Intelligence to hit $50 trillion in 2025. As reference, $50 trillion represents nearly a threefold increase from AUM levels of 2014.<\/p>\n

Lagging investment performance is giving some investors pause<\/em>. A recent $4 billion withdrawal from ESGU
\n ESGU
\n <\/fbs-ticker>, Blackrock\u2019s largest ESG-labeled exchange-traded fund, and a standard for the sustainable investing industry, raised eyebrows. Blackrock has been silent about the source of withdrawal, and it is not clear that it may not be from rebalancing from some of their own models.<\/p>\n

In another example, as of March 30, 2023, the $5.9 billion Vanguard ESG US Stock ETF (ESGV
\n ESGV
\n <\/fbs-ticker>) has declined 1.8 percent during the past two years, compared with the 4.9 percent advance of the S&P 500 in the same period. Even allowing that \u201cconstrained\u201d mandates (i.e. fossil fuel free, etc) tend to underperform the general markets over time, one wonders whether investors will have the fortitude to stick with ESG in times of underperformance?<\/p>\n

On top of recent performance concerns, lack of meaningful, consistent data combined with transparency issues continue to plague the ESG arena<\/em>. ESG score providers are drawing renewed criticism in both the US and Europe for using inconsistent approaches. And unreliable ESG ratings can lead to greenwashing<\/em>, further undermining integrity in this rapidly developing investment area.<\/p>\n

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Many asset managers and investors are sounding alarms on inconsistent ratings across information platforms. Interestingly, though Europe set the early tone on ESG reporting, the US and Europe are developing somewhat differently, though both have experienced recent major data reporting revisions.<\/em><\/p>\n

United States<\/u><\/strong><\/p>\n