Is the Rapid Rise of ESG Sustainable?

Mutual funds and exchange traded funds (ETFs) that invest based on a combination of environmental, social and governance (ESG) factors saw record inflows of $20.6 billion in 2019¹. Thats almost four times the inflows in 2018, itself a record year. Record inflows continued in the first quarter of 2020 despite a correction halfway through the quarter.

This rapid growth in investor interest has prompted the questions of whether investing with an ESG framework is part of a fundamental long-term shift or an unsustainable fad. Here, our assessment of the evolving sustainability landscape, a look at its current challenges and our analysis of ESG performance across various measures from 2007 through the first quarter of 2020.