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Europe Continues to Lead in ESG Smart Beta

FTSE Russell

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FTSE Russell’s sixth annual global institutional smart beta survey shows more asset owners combining sustainability parameters and risk premia within a single index—an approach we refer to as “Smart Sustainability.” Yet Europe is clearly leading the way globally; 77% of European asset owners expressed interest in applying ESG considerations to smart beta which (up 22% from 2018), while 17% of North American asset owners indicated similar interest (down 25% in 2018).

Tony Campos, head of ESG, Americas, FTSE Russell:

“Europe’s lead in incorporating ESG into smart beta strategies may reflect the changing regulatory context with European regulators encouraging greater disclosure by both companies and investors. There have not to date been similar regulatory developments in the US, although Canada is moving ahead and has established an Expert Panel on Sustainable Finance to advise the government.”

Regardless of implementation differences across regions, assets owners globally who anticipate applying ESG considerations to a smart beta strategy are doing so for investment reasons. More than three quarters are motivated by avoiding long-term risk as compared to a little over half of respondents last year.

Visit the FTSE Russell website to download both the 2019 global institutional smart beta survey and “smart sustainability” survey focused on combining ESG and smart beta.

Originally Posted on June 13, 2019

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