I allow myself this comment on the excellent article of Tim Quinson: 'Many Big ESG Funds Are Just Glorified Market Trackers'
The ESG ETF such as iShares ESG Aware MSCI USA (ticker ESGU) has been among the most attractive investment areas. It brings liquidity and some guarantee that invested companies are doing good in terms of environment, social and governance issues. However a large part of the market is controlled by some institutional investors. Moreover these funds mostly focus on high tech companies. The top 10 holdings of ESGU shows this aspect of sectoral concentration.
Tim Quinson rightly noted:
¨'Nevertheless, most investors in ESG ETFs likely would be more comfortable knowing that managers of their funds are focused on adhering to the best environmental, social and corporate governance principles, rather than simply looking for ways not to deviate too far from benchmark stock indexes.'
From my point of view, and in order to avoid inglorious amalgamations on real sustainable objectives, it is undeniable that this type of investment fund has a great need for management of ESG criteria internally and for an investment strategy taking into account sector diversification to consider an approach consistent with sustainable finance.
While these investment strategies seem to reflect protective measures, the fact remains that the demand for responsible investment professionals has now clearly turned a corner.
Source: Bloomberg Green Good Business, Tim Quinson ; ETF.com;