TrackInsight's ESG Observatory reveals growing alignment of ETFs to UN Sustainable Development Goals

New data from TrackInsight reveals that in the first 3 months of 2021, 87 new ESG ETFs were brought to market for a total of 758 ESG ETFs now available on exchanges around the world. 

The first quarter update to ESG Observatory – an online hub that provides transparency into the fast-growing market for ESG ETFs with proprietary research, data and screening tools – reveals that assets in ESG ETFs continued their upward growth trajectory with almost USD57 Billion of new flows, to reach a new high of USD264 Billion in assets.

As UN Sustainable Development Goals become a benchmark for assessing the sustainability impact of ETFs, Trackinsight data shows that the number of ETFs which align with UNSDGs has risen over the last quarter too, with 15 goals covered by 316 ETFs at the end of Q1 2021.

Nevertheless, Trackinsight's new data shows that most assets are aligned with only three goals: Climate action (SDG 13), Affordable and clean energy (SDG 7) and Industry, innovation and infrastructure (SDG 9).

Ailing Zhang, ETF Analyst at TrackInsight, says: “ESG ETFs had a landmark year in 2020. When we look at the figures of 2021, the sector sees no sign of slowing down. With the growth of global sustainable investment, policymakers and regulations have played an important role during this quarter. In Europe, the EU Sustainable Finance Disclosure Regulation (SFDR) came into effect this March. And in US, after returning to the Paris Agreement, President Biden has been positioning himself as a leader with the goal of reducing greenhouse gas pollution by 2030. It will take time to examine the efficiency of these new rules towards "greenwashing", but we firmly believe that a standardized reporting procedure based on transparency and quantification will help the decision-making process for sustainability-oriented investors.”

Joseph Clements, Economic Affairs Officer at UNCTAD, says: “It is important to make efforts to improve the quality of information on sustainability performance and alignment with the SDGs. Ultimately this will help shift sustainable strategies from market niche to market norm.”

Virginie van Doorn, ESG Senior Project Manager at Conser, says: “ESG investments have been gaining traction and visibility throughout 2020- perhaps due to the unpredictable market environment, but investors are still having a hard time sorting the wheat from the chaff. We’re concerned that the lack of transparency is impeding the full deployment of ESG investments and are strongly convinced of the essential role independent third-party verifiers have to play in this market.”

Fannie Wurtz, Head of ETF, Indexing & Smart Beta at Amundi, adds: “The surge of interest in responsible investing is undeniable and the trend observed last year is continuing in 2021. At Amundi, we believe that ETFs are contributing to democratising ESG investing. However, investors’ sustainability objectives differ and there is no ‘one-size-fits-all’ approach. Investors now benefit from an increasing choice of ESG ETF solutions creating opportunities to generate measurable impact towards the UN SDGs, for example through Paris-aligned climate ETFs. Our role is precisely to guide them and help them select the strategy that best meets their sustainability goals and constraints.”