Data from Trackinsight, the global ETF analysis platform, reveals that the European ETF market has turned green in 2021 with 50 per cent of the total flows year-to-date going to ESG funds.
2021 has been a record-setting year for the European ETF market with USD130 billion of flows and 96 ETF launches. Of this, USD65.6 billion of flows have been directed towards ESG funds.
Europe is the leading region for ESG ETF adoption, with 13 per cent of total assets following an ESG strategy or theme. In contrast, North American-listed ESG ETFs represent only 2 per cent of regional ETF assets and received only 6 per cent of the total flows in the region so far this year.
On a global basis, ETFs which follow a sustainable investment approach or theme continue to hit new records with USD325 billion of AuM and USD100 billion of flows year-to-date. This already exceeds the total flows into ESG ETFs in 2020 of USD88.5 billion. The number of ESG ETFs listed worldwide has grown explosively in 2021 with 174 new ETFs being launched between January and August as issuers rush to capture this asset windfall.
Ailing Zhang, ESG ETF Analyst at Trackinsight, says: “The impact of the climate crisis is obvious to all eyes that can see. The current wildfires in Turkey, Italy, and Greece have not only caught our attention, but are also a vivid illustration of the importance of changing the way we manage our environment.
“However, these latest numbers are cause for hope and indicate that we’re witnessing an historic shift in the mentality of European investors who are now putting sustainability at the heart of their investment decisions.”
Amidst the tremendous growth of ESG ETFs investors have become increasingly concerned about the risk of ‘greenwashing’, or misrepresentation of ESG credentials. To assist investors in navigating this market Trackinsight has launched a dedicated ESG investing portal to provide investors with data, screening tools and ratings to enable them to fund the ESG ETF that matched their investment objectives.
The portal provides unique analysis of all ESG ETFs listed worldwide, including a mapping ESG ETFs against United Nations Sustainable Development Goals provided by UNCTAD.