Sustainable funds, which include passively and actively managed mutual funds, ETFs, and other funds, have been growing rapidly since 2015. ESG ETFs are a subset of this market and offer a low cost, accessible route to investing sustainably. Moreover, the market has the potential to contribute to sustainable development in developing countries, and to specific investments in sectors relevant to the attainment of the UN Sustainable Development Goals (SDGs).
In recent years, growth of this asset class has been explosive and, as the fund industry and companies increasingly pivot towards sustainability in their asset allocations and activities, the trend looks set to continue – already, forecasts from 2019 hugely underestimated the trend in 2020. This paper aims to (1) provide an overview of the ESG ETF landscape in 2020 and identify key trends in the growth and distribution of ESG ETF funds; and, (2) analyze their financial and sustainability performance, as well as their contribution to the SDGs.