ETF Stream has published a report that examines the rise of environmental, social and governance (ESG) investing, from the role of regulation and data challenges to engagement and the overall ESG ETF landscape.

The report, titled ESG Unlocked: Sustainable Revolution In Full Swing, is a series of articles from ETF issuers, index providers and top journalists that look at the key aspects of the ESG ETF space.

Demand for ESG ETFs over the past two years has been nothing short of remarkable. From being viewed as a satellite holding within portfolios, ESG ETFs are now replacing investors’ core holdings.

According to data from Bloomberg Intelligence, ESG ETFs in Europe now house €172bn assets under management (AUM), as at the end of October, having accounted for around 50% of total ETF flows this side of the pond in 2021.

Overall, the report takes a deep dive into six distinct areas of the ESG market; data challenges, engagement, ESG ETF landscape, SDGs and thematic ETFs, climate ETFs and SFDR.

In particular, Qontigo focused on why a flexible approach to ESG data is key when constructing indices, Fidelity International looked at how to generate sustainable alpha through active ETFs and Northern Trust Asset Management showed why adopting higher quality with a focus on climate can reduce investment risk.

Tom Eckett, editor of ETF Stream, commented: “The findings in this report show ESG is here to stay, however, there are a number of challenges facing the rapidly growing market including data disclosure issues and greenwashing.

“From an update on the latest from SFDR to the increasing importance of engagement, we hope to provide investors with further understanding on the key aspects of the ESG ETF market in Europe.”

Download the full report here.