Benchmarking The World's Top 100 ESG Funds

Executive Summary

This report provides an in-depth examination of the largest 100 ESG funds in the world, in order to explore their performance, the ESG strategies they employ, and the third-party data vendors they rely upon, amongst other topics. Collectively, these funds have assets under management (AuM) of US$440 billion. Sixty of the top 100 ESG funds are domiciled in the European Union, followed by the United States, with 32. Japan and China have only two and one funds in the top 100, respectively.

Amongst the top 100 ESG funds, the biggest asset manager is BlackRock, who accounts for no less than 20 funds with a total AuM of US$110 billion. In second place is DWS with US$36 billion, followed by Parnassus with US$33 billion.

2022 has proved difficult: all funds on the list performed poorly over the past year[1]. However, on average, the top 100 ESG funds were able to outperform their benchmarks by an impressive 1.1% over the past year.

MSCI stands out as, by far, the largest provider of benchmarks and ESG data. However, for fixed income funds, which account for under 20% of the top 100 ESG funds, Bloomberg is the leading provider of benchmarks.

A surprising 17% of the funds rely on their own proprietary ESG scores and ratings exclusively, while 44% use a combination of proprietary and third-party data sources.

The most common investment strategy employed by ESG funds are pure exclusionary screens. However, a variety of other strategies are also employed and actively-managed funds typically employ five or six different ESG strategies.

 
 
 
 

[1] Fund performance until end of October 2022.

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