European ETF Market Prefers ESG

According to data from Trackinsight, annual ESG ETF inflows into the European ETF market outweigh non-ESG for first time.

It is a demonstrative shift in the investors mentality who are viewing a sustainability as a key driver of their investment decisions. Asset managers are adopting a wide range of strategies to justify the sustainable label since the EU brought in disclosure rules under Sustainable Finance Disclosure Regulation in March.

Of the 130bn USD of total flows into European ETFs so far this year, 65.6bn USD has been directed towards products with an ESG strategy or theme.

This compares to just 6% of total flows in the US and 8% of Asia Pacific flows this year, which both anchored the ESG-linked global flows into ETFs at 14%.

Despite this, sustainable ETFs continue to break records globally, with 325bn USD total assets under management. 100bn USD flowed into the space in 2021, already breaking the 2020 total year figure of 88.5bn USD.

According to Global Sustainable Investment Alliance’s report last month, overall sustainable investment assets grew to 35.3 trillion USD globally last year amid mounting concerns about societal inequities and climate change. That’s about 1 USD of every 3USD managed globally seeking out a profit from environmental, social and governance concerns.