Trackinsight: ESG ETF investing remains hot in 2022

The allure of investing in impactful funds has not faded in 2022 as investors added $12 billion of net inflows into ESG ETFs. Get the overview here.

2021 ESG investing overview 

The allure of investing in impactful funds has not faded this year as investors added $12.7 billion of net inflows into ESG ETFs. Once an afterthought, ESG ETFs have become a force to be reckoned with. Over the past 8 years, green investment vehicles have racked up over $300 billion in net flows and grown at a CAGR of 75% from $4.7 billion in assets under management (AuM) on January 1st, 2014, to $425 billion AuM by 2021 year-end. ESG ETFs reached a tipping point in 2020 — witnessing an incredible 223% growth over the year and achieving a new record of $189 Billion in AuM. The spurt in inflows rippled through 2021, to shatter the previous record. That year, 14% of the total ETF flows went to ESG. 

Most Popular ESG ETFs in America YTD 

Among the popular ESG ETFs in America in 2022, are the iShares ESG Aware MSCI USA ETF (ESGU) with $740 million of net inflows, followed by BMO MSCI USA ESG Leaders Index ETF (ESGY, $590 million), iShares ESG Aware MSCI EM ETF (ESGE, $348 million), Vanguard ESG U.S. Stock ETF (ESGV, $329 million) and Xtrackers Emerging Markets Carbon Reduction and Climate Improvers ETF (EMCR, $302 million). 

Most Popular ESG ETFs in Europe YTD 

In Europe, SPDR Bloomberg SASB U.S. Corporate ESG UCITS ETF (SPPU) led the pack with over $1,245 million in net inflows. Xtrackers MSCI USA ESG UCITS ETF (XZMU) came in second with $820 million, followed by BNP Paribas Easy MSCI USA SRI S-Series PAB 5% Capped UCITS ETF (EKUS, $759 million), Fidelity Sustainable Research Enhanced US Equity UCITS ETF (FUSS, $608 million), and iShares MSCI EMU Paris-Aligned Climate UCITS ETF (EMPA, $563 million). 

ESG ETF investing outlook 2022 

ESG Outlook for 2022 remains strong with many catalysts in play including the increased global sustainable regulations, the possible inclusion of Nuclear, Gas as Green Investments Under EU Taxonomy, the introduction of ESG preference for investors with MiFID2, the implementation of SFDR Sustainable Investment Product Disclosures to 2023, and above all the rise in ESG initiatives and regulations in Asia. 

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