Wind turbine and solar panel
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Traditional asset managers increasingly view their ESG credentials as a potential competitive advantage, Fitch Ratings says.

In a new report, the rating agency said that, as regulators introduce sustainability disclosure requirements in a bid to make funds more transparent — such as Europe’s new sustainable finance disclosure regulation — traditional investment managers see this as an opportunity to gain favour with investors.

Firms are “increasingly promoting their ESG credentials to investors to differentiate themselves from competitors” and gain market share, Fitch reported.

Firms are seizing this opportunity, even as regulators are also stepping up efforts to combat greenwashing in the asset management industry, the report noted.

Recently, the U.S. Securities and Exchange Commission sanctioned a firm for alleged mis-statements about ESG decision-making. And, both regulators and law enforcement in Germany are investigating suspected greenwashing at asset manager, DWS Group.

“Notwithstanding the risks of greenwashing, we expect sustainable product offerings to become increasingly important as a competitive necessity, particularly as sustainability definitions become more harmonized,” Fitch said.