European investors are more likely to invest in sustainable ETFs than US investors due to an increased awareness of sustainability issues, according to Track Insight.
The survey of 500 global investors in partnership with JP Morgan and State Street revealed 35% of European investors plan to increase exposure to ESG-aligned ETFs, compared to only 25% in the US.
European investors also demonstrate a stronger interest in environmental change strategies – 50% are already invested in this area, with an additional 40% keen to start investing in this sector.
European capital’s stronger interest is also reflected in the number of environmental change strategies available in the region – Europe offers 40% more thematic ETFs corresponding to the strategy than the US.
According to the report, this illustrates the contrasting convictions around ESG between the US and Europe and highlights the EU’s increased awareness of the topic.
The report also found that inconsistencies with ESG analysis remain the most significant hurdle to investment for global ETF investors.
2023 marked the fourth consecutive year that transparency and consistency of data remained the largest barrier to investing in ESG ETFs, with 62% of investors citing it as the most important challenge.
However, the percentage of investors identifying this as a challenge has dropped since 2021, indicating improvement in this area.
The Track Insight report also noted that the consistency of ESG data has improved since the introduction of the EU Sustainable Finance Disclosure Regulation (SFDR) in March 2021.
The regulation requires product providers to assess and disclose the ESG characteristics of products.
Despite more metrics now available for investors to measure the ESG impact of Europe-domiciled ETFs, transparency remains a greater concern with European investors than US investors.
This is due to increased regulations and potentially higher client expectations in Europe, according to Track Insight.
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