David Iturralde, Head of Fixed Income at MAPFRE AM, offers some thoughts around postive returns and ESG impact.
Donald Trump’s return to the White House has been a setback for ESG (environmental, social, and governance) investments. The Republican has never been a supporter of such policies, and during his first term, he took actions that made this clear, such as the US withdrawal from the Paris Agreement, the key international treaty on climate change.
We must recognise that 2024 was a complicated year for this type of investment (ESG), and the outlook for 2025 does not seem to be improving. This new US legislature seems to be on a similar path.
“The Green New Deal has been a disgrace,” was the Trump view in Davos in January, where he promised greater deregulation and also aimed to reverse policies in favour of sustainability and the fight against climate change.
The election of Trump as president of the United States hampers the evolution of these strategies, as it brings a distinctly negative outlook, with expectations of a weakening in both regulatory and political support.
What about Europe?
In Europe, the commitment to ESG from the main institutions seems to remain clear, although stakeholders have to wait and see how the Old Continent adapts to this new situation without losing competitiveness on the international scene.
Europe must decide whether to maintain its strict decarbonization plans, with the short-term costs it entails, or adapt them, also seeking to preserve the competitiveness of its industry, principally automotive, at a politically complicated time for both Germany and France.
However, despite the setback caused by Trump’s stance on ESG policies, there is still room for this type of investment. This has been demonstrated by the latest data from the Spanish Association of Collective Investment Institutions and Pension Funds (INVERCO), which shows that the assets of Spanish investment funds aligned with sustainability grew to €146.964 billion throughout 2024, marking a 24.3% increase compared to 2023. Sustainable funds already account for 36.8% of the total equity of Spanish mutual funds.
Focusing on the number of funds that promote environmental and social characteristics (registered as Article 8), this amounts to 362, with a total of 731 registered classes. The number of funds allocated to sustainable investment (registered as Article 9) is 21, with 46 registered classes.
Both the MAPFRE Group and its asset manager, MAPFRE AM, remain immersed in their transition to more sustainable objectives, so these types of strategies will continue to have a place in their portfolios.
Positive returns following ESG criteria
With everything mentioned above, it is clear that the major challenge for ESG investments is to continue obtaining positive returns. MAPFRE AM achieves this with its MAPFRE AM Inclusión Responsable and MAPFRE AM Good Governance mutual funds.
As an asset manager, in the long-term, ESG strategies continue to make sense, which is why we continue to focus on this type of investment.
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