Investor Demand for ESG Content Exceeds Supply

As environmental, social, and governance (ESG) investing continues to rise in popularity, more investors are searching for content on the subject. In a research report entitled “Making a Difference, Marketing a Difference” by Peregrine Communications, investors are demanding more than what is being provided by asset managers.

A press release noted that “there has been a 67% increase globally in ESG related content from asset managers across top tier media in the last 12 months, asset managers routinely provide generic, derivative content to their audiences. The research shows that 34% of the 70 topics assessed in the report are significantly “over-indexed” by the market, with more content provided on these themes than there is organic demand.”

Per the press release, here are some key findings in the report:

  • The average increase in brand interest for firms with significant ESG exposure is 80% over the last five years – demonstrating a very real ‘brand dividend’ for firms that communicate effectively around ESG.
  • Output in specialist ESG and sustainability media outlets has increased by 76%
  • There has been a 63% increase in searches globally for ESG-related content in the last 12 months
  • There has been a 36% increase in social media engagement globally around ESG issues

“In this report, we have sought to provide a framework by which asset managers can better contribute to the complex ESG conversation in a more meaningful way, a way that better reflects the interests and needs of investors,” said Anthony Payne, CEO, Peregrine Communications. “It has become increasingly clear that most asset managers’ audience are not served well by the ESG content provided them. This is why we have built our White Space framework so that asset managers can have more data about which topics their audiences are actually looking for, and ultimately so that they can build genuine category authority around these topics.”

“Our latest research confirms what a lot of people will have already suspected, that the majority of ESG content provided by asset managers is generic and hugely mismatched to the information that their increasingly well-versed audiences need,” said Max Hilton, Managing Director, Peregrine Communications.

Investors who want ESG exposure via an ETF wrapper can take look at the Xtrackers MSCI EAFE ESG Leaders Equity ETF (EASG). EASG seeks investment results that correspond generally to the performance of the MSCI EAFE ESG Leaders Index.

The fund will invest at least 80% of its total assets (but typically far more) in component securities (including depositary receipts in respect of such securities) of the underlying index. The underlying index is a capitalization-weighted index that provides exposure to companies with high ESG performance relative to their sector peers.

An additional fund to look at is the Xtrackers MSCI USA ESG Leaders Equity ETF (NYSE Arca: USSG), which has been a popular play for investors seeking exposure to socially responsible investments. USSG was developed in collaboration with Ilmarinen, Finland’s largest pension insurance company. The underlying MSCI USA ESG Leaders Index provides exposure to large- and medium-cap U.S. companies with high ESG performance relative to their sector peers.

For more market trends, visit  ETF Trends.