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Data from Trackinsight, the global ETF analysis platform, has revealed that the European ETF market has turned green in 2021 with 50% of the total flows year-to-date going to ESG funds.

2021 has been a record-setting year for the European ETF market with $130 billion of flows and 96 ETF launches. Of this, $65.6 billion of flows have been directed towards ESG funds.

Europe is the leading region for ESG ETF adoption, with 13% of total assets following an ESG strategy or theme. In contrast, North American-listed ESG ETFs represent only 2% of regional ETF assets and received only 6% of the total flows in the region so far this year.

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On a global basis, ETFs which follow a sustainable investment approach or theme continue to hit new records with $325 billion of AuM and $100 billion of flows year-to-date. This already exceeds the total flows into ESG ETFs in 2020 of $88.5 billion.

Explosive growth in ESG ETFs in 2021

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.

“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 change,” said Ailing Zhang, ESG ETF Analyst at Trackinsight. “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.”

ETF greenwashing also an issue

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 (United Nations Conference on Trade and Development) and consensus-based ESG ratings provided by Conser.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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