European investors are more likely to invest in sustainable exchange traded funds (ETFs) than their US counterparts due to an increased awareness of sustainability issues, according to a new report by 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.
The report found that 50% are already invested in this area, with an additional 40% interested to start investing in this sector.
The European commitment is also reflected in the number of environmental change strategies available in the region – the region offers 40% more thematic ETFs corresponding to the strategy than the US.
Track Insight said 30% plan to increase exposure to ESG-aligned and sustainable ETFs driven by societal good and/or conviction-based views..
Geographically, this is broken down into 35% in EMEA, 25% in both APAC and the US.
The report also noted that despite the regional differences, greenwashing remains a key concern among all investors, with the majority seeking more transparency across investment products.
It said that inconsistencies with ESG analysis remain the most significant hurdle to investment for global ETF investors, 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 attributes this to 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.
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