ESG hasn’t grown as widely as many expected
A few years ago, ESG (environmental, social, and governance) investing looked like it would become the new default. Fund providers rushed to launch ESG products, and sustainability became a major theme across financial markets.
But in reality, ESG hasn’t grown as widely as many expected — and the reasons are mostly practical.
Demand Has Been Lower Than Predicted
While many investors support the idea of responsible investing in principle, far fewer have consistently chosen ESG products in practice. In a higher-cost, higher-rate environment, most investors still prioritise returns, fees, and simplicity over sustainability labels. Empirically, we have found this to be the case when discussing investment preferences with clients.
ESG isn’t disappearing, but it is evolving.
The next phase is likely to be less about hype and more about clarity, consistency, and measurable outcomes — which could eventually make ESG more attractive and more mainstream.
ESG Is Hard to Define (and Harder to Trust)
A major issue has been inconsistency. ESG scores and methodologies often differ widely, making it difficult for investors to know what they’re actually getting. This has contributed to skepticism and concerns about “greenwashing”. For example, many of the new high tech firms are deemed ESG which, to many, seems a little strange.
ESG Comes With Higher Costs
Building ESG portfolios properly requires additional data, monitoring, reporting, and ongoing research. That extra complexity tends to increase costs — and not all investors are willing to pay for it, especially when the value isn’t always clear.
Where Aisa International Stands
At Aisa International, we’ve monitored the ESG landscape closely. While ESG remains an important global topic, we have opted not to offer dedicated ESG portfolios at this time, mainly due to:
- Lack of sustained client demand, and
- High research and implementation costs required to do ESG properly.
This isn’t a rejection of ESG principles , we are still able to introduce investors to companies that provide such services via their own discretionary management.
Summary
ESG isn’t disappearing, but it is evolving. The next phase is likely to be less about hype and more about clarity, consistency, and measurable outcomes — which could eventually make ESG more attractive and more mainstream.
