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ETF Specialist

Passive Sustainable Funds Maintain Their Momentum

Adoption of these sustainable index funds and ETFs is on the rise in the United States but still lags Europe.

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Globally, sustainable investing has gathered impressive momentum in recent years. Most sustainable funds are actively managed, but passive sustainable funds are growing in number, size, and complexity and are making their own mark on the landscape.

The uptake in passive sustainable funds has been driven by changing attitudes from both investors and fund providers. It reflects a growing recognition that environmental, social, and governance, or ESG, factors can be material to long-term financial performance, as companies face greater scrutiny from consumers, regulators, and employees alike over their ESG practices. The crisis caused by the coronavirus pandemic has further highlighted the importance of building sustainable and resilient business models based on multi-stakeholder considerations.

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Kenneth Lamont does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.