Environmental, social and governance (ESG) investing has come under increasing scrutiny this year as regulators crack down on greenwashing and some politicians target investment style, saying the asset managers behind it are politically motivated.
Even with these controversies, a majority of finance professionals support this methodology and see long-term relevance in it. This could be good news for related exchange-traded funds, including the SPDR Bloomberg SASB Developed Markets Ex US ESG Select ETF (RDMX)the SPDR S&P SmallCap 600 ESG ETF (ESIX)and the SPDR S&P 500 ESG ETF (EFIV)among others.
“A survey of 550 Bloomberg Terminal users found that more than 60% expect ESG to be either integral to running a business or increasingly essential to it. By comparison, around a third of respondents think the strategy that considers environmental, social and governance issues – and impacts around $40 trillion in assets – is just a “ fashion “. according to the news agency.
Of those surveyed, 41% believe ESG will eventually become standard business practice, while a further 20% said related issues will be more critical in the coming years.
Whether or not these trends facilitate the increased adoption of ESG ETFs remains to be seen, but there is continued momentum on this front. Despite the erosion this year of growth stocks – an asset class that pervades equity-based ESG ETFs – advisors and investors continue to allocate capital to these funds.
Bloomberg Terminal’s subscriber survey also indicated that there are notable regional differences in how investment style is perceived, indicating that there is still room for growth in related ETFs. in many of the largest ETF markets in the world.
“European respondents were the most optimistic about the importance of ESG, followed by those surveyed in Asia, with the Americas trailing by around 50%,” according to Bloomberg.
The motivations for adopting the investment style vary but are credible. These include the theory that companies that perform well in these terms are more profitable and fund managers adopt the style at the request of value-driven clients.
“More than half of respondents to Bloomberg Terminal’s reader survey said they are taking ESG action because it’s critical to increasing corporate earnings rather than having a positive impact. society and reduce carbon emissions Some 62% of respondents said they act on ESG at the request of their clients, while around three-fifths said they do so primarily to protect the reputation of their business,” the survey notes.
Other SPDR ETFs include the SPDR Bloomberg SASB Emerging Markets ESG Select ETF (REMG)the SPDR Bloomberg SASB Corporate Bond ESG Select ETF (RBND)the SPDR MSCI US Gender Diversity ETF (SHE)and the ETF SPDR MSCI USA Climate Paris Aligned (NZUS).
For more news, information and analysis, visit the ESG channel.
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