Shareholders are treating European asset managers with caution amid signs the industry is facing a regulatory crackdown on its claims around environmental, social and governance investing, according to a fresh analysis.

The share prices of asset managers in Europe “have unexpectedly disconnected” from their estimated earnings, according to Mandeep Jagpal, an analyst at RBC Capital Markets in London. Consensus earnings are up 7% since the end of the second-quarter reporting period, while share prices across the industry have fallen by 8%, he said in a client note on Tuesday.

After years of unchecked ESG claims, the fund management industry now faces a much tougher regulatory environment as authorities try to eradicate greenwashing. The vigour with which potentially misleading claims of green investing are being challenged became clear in late August, when it emerged that Deutsche Bank AG’s asset management arm DWS Group was being investigated in the U.S. and Germany. DWS, which has denied it misstated the scope of its ESG business, has yet to recover from a 14% share-price slump triggered by an investor panic.

To continue reading,

Sign in to access this Premium article.

Subscription entitlements:

Less than $9 per month
3 Simultaneous logins across all devices
Unlimited access to latest and premium articles
Bonus unlimited access to online articles and virtual newspaper on The Edge Malaysia (single login)

Stay updated with Singapore corporate news stories for FREE

Follow our Telegram | Facebook