ESG ETFs and ETPs see global assets hit record US$280 billion

Assets invested in environmental, social, and governance (ESG) exchange-traded funds and exchange-traded products listed globally reached a record US$280 billion at the end of May 2021. That’s up 4.1% from US$269 billion at the end of April, research and consultancy firm ETFGI says.

Net inflows of ESG ETFs and ETPs reached US$6.54 billion in May, bringing year-to-date net inflows to US$73.95 billion, up from US$26.42 billion during the same period in 2020.

Since the launch of the first ESG ETF/ETP in 2002, the iShares MSCI USA ESG Select ETF, the number and diversity of products have increased steadily, with 620 ESG ETFs/ETPs and 1,834 listings globally at the end of May 2021. They came from 139 providers on 37 exchanges in 30 countries. A total of 18 ESG ETFs and ETPs were launched in May alone.

Substantial inflows can be attributed to the top 20 ETFs and ETPs by net new assets, which collectively gathered US$4.03 billion in May. The iShares ESG Aware MSCI USA ETF gathered US$417 million, the largest in net inflows.

Confusion persists around what constitutes an ESG fund. According to Principles for Responsible Investment, a United Nations-supported initiative which seeks to understand the investment implications of ESG issues, 56% of adopters believe there is a lack of clarity in ESG definitions. ETFGI says its classification system attempts to provide greater precision, with ETFs and ETPs listed globally organized into categories, including core ESG products and theme-based groups, such as clean/alternative energies and gender diversity.