## [# Demand for ESG Funds Tops Supply: PwC ](/sections/news/demand-esg-funds-tops-supply-pwc)
# Demand for ESG Funds Tops Supply: PwC
U.S., European managers plan to increase their sustainable investments, a survey finds.
[](/contributors/zoya-mirza)
[By Zoya Mirza](/contributors/zoya-mirza)
Oct 12, 2022
Edited by: Zoya Mirza
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Demand for environmental, social and governance products is soaring as sustainable investments boost portfolio values, and clients seek places to put their money that don’t punish the environment, a survey has found.
Growth in ESG investing is expected to outpace the asset and wealth management market as a whole, PwC said in a [report](https://report/) released this week. ESG assets under management in the U.S. are expected to double to $10.5 trillion by 2026, according to PwC. Still, only less than half, 45%, of managers are planning to start new ESG funds.
“Stakeholders and investors are telling us ESG is a priority,” Kevin O’Connell, PwC’s global asset and wealth management ESG leader, said in an email, adding that demand topping supply was not expected: “The asset and wealth management industry has an opportunity to be at the forefront.”
In the U.S., 81% of institutional investors plan to boost ESG assets over the next two years, PwC said. The U.S. is the world’s largest asset and wealth management market, with $67 trillion managed.
The share of ESG investments among all assets under management is expected to increase to 22% in 2026 from last year’s 14%.
ESG-oriented exchange-traded funds have in some cases kept pace with broader stock market measurements. The [**iShares ESG Aware MSCI USA ETF (ESGU)**,](https://etf.com/esgu) with $20.9 billion in assets, over the past five years has matched the performance of the S&P 500, while slightly trailing it this year.
**Boosting Demand**
In total, 60% of surveyed investors said ESG has already resulted in higher yields in their investment performance, compared with non-ESG equivalents.
To meet the high demand, O’Connell suggests asset managers should prioritize converting existing products into ESG-oriented ones.
The findings come against a backdrop of rising anti-ESG sentiment, where asset managers and politicians alike have criticized firms for prioritizing climate solutions investments over their investors’ profits.
In [August](https://www.etf.com/sections/features-and-news/blackrock-texas-trade-barbs-over-esg), 19 GOP attorneys penned a [joint letter](https://www.texasattorneygeneral.gov/sites/default/files/images/executive-management/BlackRock%20Letter.pdf) to BlackRock, the largest issuer of ETFs in the U.S., stating that the asset manager was not doing its fiduciary duty when using “the hard-earned money of \[the\] states’ citizens” to forward its “climate agenda” and not prioritizing financial returns.
“ESG is not just good for a company's stakeholders, its community, and our broader society, but also for a company's bottom line,” O’Connell wrote. “By integrating ESG principles, the industry is putting action behind their purpose.”
*Contact Zoya Mirza at* [*zoya.mirza@etf.com*](mailto:zoya.mirza@etf.com)
[ Zoya Mirza ](/contributors/zoya-mirza)
Zoya Mirza is a markets reporter at etf.com. Her work has appeared in USA Today, Voice of America, and United Press International, among others. Mirza… [View Bio](/contributors/zoya-mirza)
Related Topics [ESG](http://www.etf.com/topics/esg)
[Environment](http://www.etf.com/topics/environment)
[Thematics](http://www.etf.com/topics/thematic-etfs)
[Blackrock](http://www.etf.com/topics/blackrock)
[Broad-based](http://www.etf.com/topics/broad-based)