BNP Paribas Asset Management European ESG ETF Barometer shows strong shift in investor expectations
The latest BNP Paribas Asset Management (‘BNPP AM’) European ESG ETF Barometer reveals that most investors surveyed expect the European ESG ETF market to continue to expand over the coming year. In particular, it shows particular interest in low-carbon, PAB-aligned strategies and renewed confidence around sustainability labels.
The twice-yearly survey, first conducted in April 2022, monitors the evolution of European institutional and intermediary investors’ outlook and practices with regard to sustainable investment in index strategies. The latest survey highlights the following during the second half of 2022:
- 66% of investors consider the ETFs currently available on the market to show real sustainability benefits, such as a positive impact on ESG issues. This opinion is widely shared by Swiss investors (74%), against 54% of respondents in Italy, and by 85% of pension funds compared to 56% of asset managers.
- 67% of investors consider ESG voting and engagement policies to be robust. Active dialogue to support companies in their transition was of particular note.
- Interest in low-carbon, emissions reduction or PAB-aligned strategies has risen sharply over the past six months, from 14% to 36%, with some notable disparities between countries. 48% of Swiss investors are particularly interested in this theme, compared to 20% in France. Other interesting themes include battery innovation, hydrogen and the electrification of transport, increasing from 8% to 33%.
- The three most important criteria used by investors selecting ESG ETFs were sustainability labels and certification (18%), the management company's ESG credibility and expertise (15%) and tracking error against benchmark (14%).
- 81% of investors expect ESG ETF assets under management to remain stable or grow over the next 12 months, compared to 91% in the previous survey. This decline may be explained by performance during 2022. The most optimistic respondents were in the UK (96%), while the least optimistic were in Germany (68%).
- Investor demand slowed for ETFs investing in the circular economy (26%, compared to 61% in the previous survey) and the blue economy (down to 32% from 48%), in contrast to growing demand for low carbon and alternative energy.
Lorraine Sereyjol-Garros, Global Head of Development ETF & Index solutions at BNPP AM, comments:
“The results of the latest survey show that investor expectations can change very quickly depending on market conditions and regulatory developments. In this changing environment, sustainable index strategies continue to attract significant inflows, particularly those aligned with the objectives of the Paris Agreement. This underscores our strategy, started in 2008, of offering an extensive range of low-carbon ETFs and index funds, both on equities and fixed income, with assets under management now more than EUR 13 billion.”
BNPP AM has been at the forefront of ESG ETF innovation since 2008, when it became the first asset manager to launch a low-carbon ETF, BNP Paribas Easy Low Carbon 100 Europe. Since then it has continued to add to its thematic ETFs, with the range now covering biodiversity, the blue economy, green real estate, sustainable infrastructure, medical technology, green hydrogen and the circular economy. BNPP AM manages ETF assets and Index assets totalling EUR 39 billion across 100 funds and is planning a number of additions to its range through the course of 2023.
- ENDS -
- ^  Survey conducted in November 2022 on behalf of BNP Paribas Asset Management by Longitude, a Financial Times company. Respondents included asset managers and asset owners based in France, Germany, Italy, Switzerland and the UK.
- ^  Environmental, Social & Governance
- ^  Exchange Traded Fund
- ^  Paris-Aligned Benchmark
- ^  ESG strategies accounted for 65% of all European ETF inflows in 2022 according to Morningstar data, up from 53% in 2021.
- ^  Source: BNPP AM, as at 31 December 2022
- ^  As at December 2022, source: www.easy.bnpparibas.fr
BNPP AM developed the European ESG ETF Barometer together with B2B thought leadership agency Longitude, a Financial Times company, to monitor how investors’ sustainable investment outlook and practices are changing over time. Conducted twice yearly, the survey gauges the opinions of 250 investment executives at insurers, pension funds, asset managers and wealth managers in France, Germany, Italy, Switzerland and the UK and assesses five key areas:
- ETF landscape – Perception of the ETF market and expected allocations to ESG ETFs.
- ESG integration - Investors’ reliance on different ESG integration methods and the issues they are prioritising in their engagement and stewardship activity.
- Thematic opportunities – Investors’ appetite for different ESG-related investment themes.
- Regulatory environment - The perceived efficacy of regulations governing ESG products.
- Emerging risks – Investor sentiment regarding to ESG investment risk.
Global Head of Development ETF & Index Solutions
Lorraine Sereyjol-Garros has been Global Head of Development for BNP Paribas Asset Management’s ETF & Index solutions since November 2017. She joined the company...