Socially Responsible ETFs Face a Long Road Ahead

“ESG is very much about risk management,” Martin Small, U.S. Head of iShares at BlackRock, told Reuters. “ESG is not going to avoid all extreme risks … It does reduce the range of those risks materially.”

Financial advisors focusing on ESG argue that index providers will continue to create more tailored products, like SPDR MSCI ACWI Low Carbon Target ETF (NYSEArca: LOWC), iShares MSCI ACWI Low Carbon Target ETF (NYSEArca: CRBN) and SPDR Gender Diversity Index ETF (NYSEArca: SHE), to attract more investors from actively managed funds.

“The whole investment industry has been sliced into micro-indexes, and you will see the same thing happen in the ESG field over time,” Marlo Stil, an advisor at The Wealth Consulting Group, told Reuters.

For instance, BlackRock’s iShares recently came out with the iShares ESG USD Corporate Bond ETF (NasdaqGM: SUSC) and iShares ESG 1-5 Year USD Corporate Bond ETF (NasdaqGM: SUSB), two ESG-themed bond ETF options.

For more information on the ESG theme, visit our socially responsible ETFs category.