ETFWorld.co.uk
Hildebrand Philipp BlackRock

BlackRock : ESG Reshaping sustainable investing

BlackRock:  ESG Four forces that we believe will accelerate sustainable index adoption and drive $1 trillion in new assets this decade….

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Philipp Hildebrand, Vice Chairman bei BlackRock


We believe four forces will help grow assets in global exchange traded funds (ETFs) and index mutual funds by roughly $1 trillion by 2030.

Recognition that sustainability influences risk and return

Better data leading to better indexes

Access to ESG at a fraction of the  cost through indexation

Sustainable choices for every portfolio

We believe four forces will help grow assets in global exchange traded funds (ETFs) and index mutual funds by roughly $1 trillion by 2030.

Into the mainstream

Sustainable investing used to cater to niche investors and was often considered expensive, values-focused and indifferent to performance.

Indexation is helping to upend these perceptions by delivering choice, value and access to all investors. First-generation sustainable indexing strategies were available only to large institutional investors but today ETFs and index mutual funds allow all investors to target environmental, social and governance (ESG) risks and opportunities that are often missed in traditional financial analysis.

We believe many investors are poised to rotate out of traditional funds and into sustainable ones, and that advances in ESG research and indexing will enable ETFs and

index mutual funds to play a pivotal role in the transition.

Indexed assets as a proportion of the $1.4 trillion market for sustainable funds more than doubled to 16% in 2019 from 7% in 2015.1 There is much more headroom for growth: Index penetration in mature fund markets, such as U.S. – domiciled equities, is 49%.2

Last year marked an inflection point for the adoption of global sustainable ETFs and index funds. Flows tripled in 2019 to a record $55 billion, raising global assets in sustainable ETFs and index funds to $220 billion.3 Inflows have persisted into sustainable index ETFs in early 2020 in the face of pandemic-related market turmoil, underscoring persistent and growing investor demand for sustainable strategies.

Inflows into global sustainable ETFs totalled $14.8 billion in the first quarter of 2020 even as the entire fund industry experienced heavy outflows.4

We believe the growth of sustainable indexing is only getting started. This paper discusses the four forces most likely to propel the adoption of sustainable ETFs and index funds and boost assets roughly six-fold to $1.2 trillion by the end of this decade.5


1 BlackRock analysis of Morningstar data, as of March 2020.

2 Morningstar, data as  of 31 December 2019.

3  BlackRock analysis of Morningstar data, as of March   2020.

4 BlackRock analysis of Bloomberg data, as of 1 April 2020.

5 BlackRock projection, April 2020, based on Morningstar data, as of March 2020

Source: ETFWorld.co.uk

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