Industry Updates

Fixed income ESG indices overtake equities for first time

Fixed income ESG indices almost doubled over the past 12 months

Theo Andrew

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The number of fixed income ESG indices has surpassed the number of equity equivalents for the first time, according to the latest Index Industry Association (IIA) global benchmark survey.

It comes after a record-breaking year of growth which saw the number of fixed income ESG indices almost double over the past 12 months – increasing by 95.8% – smashing the previous record of 61.1% in 2021.

Global fixed income ESG indices was the fastest growing segment, increasing at a rate of 122.5% while equity ESG indices also experienced impressive growth, jumping 24.2% over the same period.

Overall, the number of ESG indices globally grew by 55%, according to the survey, as investor demand continues to develop.

Rick Redding, CEO of the IIA, said: “The index industry continues to meet the needs of the marketplace by creating innovative solutions.

“Highlighted again this year by record growth in ESG, index providers are empowering investors with the ability to define, track and better understand an ever-broadening range of financial markets, sectors, investment styles and asset classes.

“The results also reveal index providers are diversifying into additional asset classes and increasing competition in every major category.”

More broadly, the number of indices grew by 4.4% over the past 12 months, marginally lower than the 5% experienced the previous year.

Fixed income indices grew by 4.5%, slightly outpacing equities which increased by 4.3%.

The increased demand for ESG ETFs has also seen many issuers tighten or add ESG metrics to their products, while ETFs classified as Article 9 or ‘dark green’ under the Sustainable Finance Disclosure Regulation (SFDR) have caught the majority of inflows.

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