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IIA’s fourth survey shows 40 per cent growth in ESG indexes

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The Index Industry Association’s (IIA) fourth Annual Benchmark Survey has revealed a 40 per cent growth in the number of indices measuring ESG criteria in the past year, and indexes covering fixed income also saw growth, 7.1 per cent over the last year and close to 15 per cent in the last two years.

Rick Redding, the CEO of IIA, says: “The survey’s 2020 results demonstrate a competitive industry that continues to broaden its offerings to meet investor demand. Indices today are sophisticated representations of markets covering a wide spectrum of asset classes and investment themes, and an integral piece of the global investor’s toolkit.”   

The IIA writes that while 2020 has been marked by unprecedented levels of market volatility, disruption and investor uncertainty amidst the global Covid-19 pandemic, the overall number of indices climbed by approximately 3 per cent to 3.05 million, as investors looked to independent index providers for solutions, unbiased signals and timely data. The industry also continued to innovate and diversify, responding to investors needs with new offerings, particularly in the ESG and fixed income spaces.  

The number of ESG indices globally rose by 40.2 per cent in the past year following a 13.9 per cent rise from 2018 to 2019, registering the highest year-on-year increase in any single major index class in the survey’s history. Fixed income growth has also been steady, with a nearly 15% rise in the number of indices measuring global bond markets over the past two years, with notable growth in the ESG sector as product issuers look to build more-diversified and ESG-compliant products, the IIA says. 

“Delving deeper, growth in fixed income was demonstrated across the full range of index subcategories, whereas equities growth was primarily concentrated in industry/sector, thematic, and ESG-related products,” Redding says.

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