ESG Indexes Grow by 40%

on

Stockholm (NordSIP) – According to the Index Industry Association’s (IIA) fourth Annual Benchmark Survey, ESG indices were one of the main drivers of growth in the index market witnessing a 40.2% growth during 2019-2020. This level of expansion is the highest on record according to the IIA, and was more than twice as much as witnessed in the previous year (13.9%)

IIA is an independent, non-profit organization based in New York that provides a voice for the global index industry. Founded in March 2012, the association represents the global index industry by working with market participants, regulators and other representative bodies to promote competition and sound practices in the index industry.

- Promotion -

“The survey’s 2020 results demonstrate a highly competitive industry that continues to broaden its offerings to meet investor demand,” Rick Redding, the CEO of IIA, commented. “Indices today are transparent and reliable representations of market segments covering a wide spectrum of asset classes and investment themes, and an integral piece of the global investor’s toolkit.”

Even in the second fastest growing category of indices, fixed income (up by 7.1%), sustainability factors were an important contribution to growth.  “Delving deeper, growth in fixed income was demonstrated across the full range of index subcategories, whereas equities growth was primarily concentrated in industry/sector, thematic, and ESG-related products,” Redding added

However, there is room to grow. Despite the record-breaking pace of growth of ESG indices, their total share of the market remains very small. Among equities, and grouped together with other factor, and thematic indices, ESG benchmarks only represent 6.8% of the market, the smallest share among all of the IIA’s categories. Among fixed income, the share is even smaller, standing only at 1% of the total.

The membership of the IIA includes the world’s leading index providers, such as  Bloomberg Indices, Cboe Global Markets, Chicago Booth Center for Research in Security Prices (CRSP), China Central Depository and Clearing, FTSE Russell, Hang Seng Indexes, ICE Data Services, IHS Markit, Morningstar Indexes, MSCI Inc., Nasdaq Global Indexes, Shenzhen Securities Information Co., Ltd., S&P/Dow Jones Indices, Tokyo Stock Exchange and Qontigo (formerly STOXX).

Image by ar130405 from Pixabay

Partner message

In the midst of a global pandemic, Apple announced one of the corporate world’s most ambitious environmental blueprints – to reduce the climate impact of every Apple device to net zero by 2030. The plan involves cutting 75 per cent of the company’s existing carbon footprint, not only for its own business but also across the manufacturing supply chain and product life cycle.

Learn more

NordSIP Insights

Most read this week

Opportunities and Challenges in China

by Heidi Berg, independent impact investment and ESG consultant based in Shanghai China is among the least affected economies by the ongoing pandemic, and the...

AP1 Ushers in New Passive Fund