Investors are aligning themselves with the United Nations Sustainable Development Goals (SDGs) when allocating to ESG, according to a survey conducted by ETF Stream and Amundi.
The survey of 105 investors across Europe, which featured in a report of initial findings titled ETF Scan: The Big Picture, found 35% of respondents said they want ESG exposure linked to either impact or the 17 SDGs, the most across all responses.
Chart 1: In general, how do you approach ESG in your portfolios?
Source: ETF Stream and Amundi
This highlights the use case for thematic ETFs which can offer targeted exposure to areas of the market such as clean energy, climate, education and clean water.
Inflows into thematic ETFs have surged over the past two years. They now total over $40bn assets under management (AUM) across 81 ETFs, up from under $10bn at the end of 2019, according to data from Global X.
Meanwhile, pension funds have started partnering with issuers and index providers to launch strategies targeting certain SDGs that are aligned with their beliefs and values.
Some 26% of respondents said they are looking for ESG with climate or net-zero alignment. This has been another recent trend in the ETF space with issuers starting to combine the European Union’s climate benchmarks with ESG metrics.
Overall, it is clear investors are committed to ESG. Highlighting this, 51% said they believe ESG investing is here for the long term while 44% said it is important but they are still at an early stage and just 5% said it was a passing trend.
According to data from Amundi, ESG accounted for 50% of equity ETF net inflows in Europe and 46% of all fixed income ETF inflows in 2020.
Matthieu Guignard, global head of ETF, indexing and smart beta product development and capital markets at Amundi, said: “The rotation towards ESG is proving to be a seismic shift, not a fad. Inflows to equity ESG ETFs and fixed income ESG ETFs remained strong, surpassing full year 2020 flows in only the first nine months of 2021.
“ESG is one of our principal ETF investment themes for 2022. We expect further acceleration of ESG integration as investors increasingly embrace a more sustainable future, coupled with the added momentum from policy measures, particularly across Europe.”
The initial findings of the survey conducted by ETF Stream and Amundi have been published in a report. To read the full report, click here.