ESG ETFs Hold Top Appeal for European Investors
Track Insight's findings suggest that European investors show a greater inclination towards investing in sustainable ETFs compared to their US counterparts.
This trend can be attributed to the heightened awareness of sustainability issues among European investors.
The survey, conducted in collaboration with JP Morgan and State Street and involving 500 global investors, revealed that 35% of European investors have plans to increase their exposure to ESG-aligned ETFs, whereas the corresponding figure for US investors is only 25%.
Moreover, European investors exhibit a stronger interest in environmental change strategies, with 50% of them already having investments in this sector and an additional 40% expressing a desire to initiate investments in this field.
The enthusiasm of European investors is also evident in the availability of environmental change strategies within the region, as Europe offers 40% more thematic ETFs catering to this specific investment strategy compared to the US.
The report emphasises the contrasting perspectives on ESG between the US and Europe, highlighting Europe's heightened awareness of the subject. It further reveals that global ETF investors continue to face significant obstacles due to inconsistencies in ESG analysis.
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Transparency and consistency of data have consistently been identified as the primary barrier to investing in ESG ETFs for the fourth consecutive year in 2023, with 62% of investors considering it the most crucial challenge. However, there has been a decrease in the percentage of investors identifying this as a challenge since 2021, indicating progress in addressing this issue.
The report states that there has been an improvement in the consistency of ESG data following the implementation of the EU Sustainable Finance Disclosure Regulation (SFDR) in March 2021.
The SFDR mandates that product providers evaluate and disclose the ESG attributes of their products. Although there are now more metrics accessible to investors for assessing the ESG impact of ETFs based in Europe, transparency continues to be a more significant concern for European investors compared to their counterparts in the United States. This can be attributed to stricter regulations and possibly higher client expectations in Europe, as stated by Track Insight.
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Source: Funds Europe