Trackinsight Has Been Supporting the 17 UN SDGs Since 2019

The 17 Sustainable Development Goals set by the United Nations in 2015 are not only a humanitarian call for actions from governments but they also represent long-term investment opportunities for investors willing to drive financial flows towards corporations contributing to their achievements.

In 2019, Trackinsight launched a dedicated ESG Investing channel to help investors navigate the fast-growing landscape of ETFs embedding an ESG footprint. In collaboration with UNCTAD, Trackinsight has also aligned part of this universe of ETFs to the 17 UN SDGs based on their investment objectives, the ESG Consensus® grade developed by Conser ESG Verifier and EU SFDR classification.

Eligible universe of the ESG Investing channel

The eligible universe starts from the set of Equity and/or Fixed Income ETFs meaning that other asset classes are not taken into consideration. Eligibility criteria differ between Europe-domiciled ETFs and those domiciled elsewhere. For Europe-domiciled funds, only UCITS ETFs classified as Article 8 and 9 as per EU SFDR classification are retained. ETFs domiciled outside Europe are only eligible if they follow a long-only investment strategy embedding a sustainable footprint and if they achieve a minimum Conser ESG Consensus® grade of B- (i.e., at least 70% of holdings are considered above market consensus in terms of ESG quality). Synthetic ETFs which are not domiciled in Europe are excluded. Finally, to ensure consistency across the eligible universe, ETFs tracking the same index overseas and qualified in Europe are also selected.

The eligible universe consists of 1652 ETFs worldwide, with a significant concentration in Europe, comprising 1302 UCITS share classes. As of March 31, 2024, the total assets amounted to USD 556.7 billion.

Alignment to the 17 UN SDGs

A suitability assessment and a mapping of the investment objective of each eligible ETF to the 17 UN SDGs are then conducted across the entire eligible universe. Among other resources used including direct inputs from fund managers, Trackinsight namely relies on an internally developed SDG framework for mapping ETFs and measuring their SDG alignment.

Trackinsight has identified more than 40 investment themes arising from its proprietary thematic classification, the so-called Trackinsight Thematic Taxonomy, that can be aligned to at least one of the 17 UN SDGs. As a result, the SDG-alignment of thematic ETFs is deduced from this reference mapping provided they cover one of these themes.

As of now, a one-for-one mapping is applied but due to the fast-growing pool of thematic ETFs, especially in Europe, an alignment approach across multiple SDGs should be implemented over time.

As of the end of Q1 2024, with coverage of 557 share classes, thematic ETFs embedding an ESG footprint aligned to the UN SDGs reached a total asset value of $135.3 billion, accounting for nearly a quarter of the entire eligible universe. This is 24% higher year-over-year when AUM totalled $108 billion, indicating sustained market appetite for thematic investing aligned with global goals.

The opinions expressed in this publication are those of the authors and are subject to change. They do not purport to reflect the opinions or views of Trackinsight or its members. Trackinsight does not guarantee the accuracy, completeness, or reliability of the information provided.