Most targeted UN SDG of ESG ETFs worldwide 2024, by number of ETFs

Goal 13 of the United Nations Sustainable Development Goals (SDG) - climate action - was the most targeted by global ESG ETFs in 2024. Among the 552 ESG ETFs that targeted the SDGs, 280 targeted the 13th goal. Affordable and clean energy (goal number 7) was the second most targeted goal, with 82 ETFs as of February 2024. Institutional investors primarily review company reports for underlying holdings as a method for ESG ETF evaluation, so fund managers must focus on companies with strong ESG practices and transparent sustainability reporting.

What is Sustainable investing?

Sustainable investing is becoming increasingly important in the financial world. In its broadest form, sustainable investing is where investment decisions incorporate how a company manages risks associated with environmental, social, and governance (ESG) issues. Many investors like the idea of making money while simultaneously catering to the growing demand for greater emphasis on the ESG scores of companies. ESG scores are the simplest way to incorporate environmental, social, and governance concerns into investment strategies because they provide standardized values that investors can use to compare companies' performance on ESG concerns.

Why have ESG ETFs seen a rise in popularity?

Investors are becoming more interested in ESG ETFs lately. Between 2014 and 2023, the number of ESG ETFs worldwide experienced a significant increase of more than tenfold. This surge in interest and investment can be partially attributed to consumers' increased awareness, who prefer to support businesses that align with their values and make positive contributions to society and the environment. Moreover, regulators and policymakers are increasingly interested in ESG as they seek assistance from the corporate sector in resolving issues such as climate change, workplace diversity, and human rights.