Environmental, social, and governance investing has become increasingly popular among investors. Data from Refinitiv Lipper show that global ESG funds received a record $649 billion in investor capital in 2021 through November 30, up from $542 billion in 2020 and $285 billion in 2019.
Speaking with CNBC’s Diana Olick on Tuesday, Microsoft co-founder Bill Gates argued that investors should look at a company’s corporate sustainability qualifications when considering whether to invest in them.
“I give people strong points where they’re making those investments and becoming customers of those green technologies,” Gates said in an interview with CNBC’s Diana Olick. “The ‘E’ part — a lot of controversy, but there is a way to measure it, and it should be one of the factors people look at when they invest in companies.”
Added Gates: “The whole measurement thing is a little immature. The field is going to get mature on that. But having that environmental incentive — a lot of investors really do want to get that information.”
As the field matures, the federal government is looking to combat greenwashing and help investors make more informed choices when it comes to ESG. In May, the U.S. Securities and Exchange Commission proposed new rules preventing misleading or deceptive claims by U.S. funds on their ESG credentials and increasing disclosure requirements for such funds.
For investors who want to invest in companies with strong sustainability credentials, there’s the Xtrackers S&P 500 ESG ETF (SNPE) and the Xtrackers S&P SmallCap 600 ETF (SMLE).
SNPE seeks investment results that correspond generally to the performance of the S&P 500 ESG Index, which is designed to measure the performance of securities meeting sustainability criteria while maintaining similar overall industry group weights as the S&P 500.
SMLE is SNPE’s small-cap-focused sibling fund, seeking investment results that correspond generally to the performance of the S&P SmallCap 600 ESG Index, which is also designed to measure the performance of securities meeting sustainability criteria while maintaining similar overall industry group weights as the S&P SmallCap 600.
Both funds exclude tobacco, controversial weapons, and companies not in compliance with the UN Global Compact (UNGC). In addition, those with S&P DJI ESG Scores in the bottom 25% of companies globally within their GICS industry groups are excluded.
SMLE holds 381 positions as of October 18 and has an expense ratio of 0.15%. SNPE holds 306 positions as of October 18 and has an expense ratio of 0.1%.
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