Essay 1
The current state of ESG ETFs
Executive summary
Total ESG ETF assets are $449.5 bln as of February, 2023.
The yearly net flows into ESG ETFs increased 36 times: from $4.7 bln in assets under management in 2014 to $169 bln in 2021.
Europe and the US take the leading role in global ESG ETF assets.
Introduction
Demand for ESG ETFs is expected to grow in the medium term amid global green-recovery efforts. Global ESG assets are on track to exceed $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management[1].
ESG investing overview
Over the past 8 years, growth of ESG ETF assets was outstanding. The yearly net flows into ESG ETFs increased from $4.7 bln in assets under management in 2014 to $169 bln in 2021. As a result, total ESG ETF assets reached $449.5 bln by February, 2023. 
Source: [2]
Source: [1]
Europe and the US take the leading role in global ESG ETF assets, while Asia is taking the pace. In 2021 European market reached $263 bln in AuM, the US market lags with $152 billion, while Asia-Pacific (APAC) has a meager $12 billion worth of exposure. At the same time, 55% of all net inflows into Europe went into ESG ETFs, compared to just 11% of APACs’ and 6% of Americas’. The APAC region can catch up to Europe and America given the size of its markets and the concentration of Western production and manufacturing in the region. According to analysts, China and Japan are going to lead the next wave of growth.[4] However, according to Blackrock statistics, the biggest ESG Funds located in North America. Europe and Asia Pacific are not in the top.
Source: [5]
Source: author
ESG ETFs are characterized by high profitability and high assets class. In total, 60% of surveyed investors said ESG has already resulted in higher yields in their investment performance, compared with non-ESG equivalents[5]. According to Blackrock data, almost all ESG funds have ‘AAA-A’ assets class. The iShare Core S&P 500 ETF has the biggest net assets. The “greenwashing” remains one of the main risks to the industry. However, the upcoming regulatory changes will help to mitigate these risks. 
Source: author
Source: author
Conclusions
The analysis has shown that ESG ETFs are profitable and secure assets. The market will continue to grow over the medium term. Priority destinations for the investors are Europe, the US and Asia.
Bibliography
[1] https://www.bloomberg.com/professional/blog/esg-assets-may-hit-53-trillion-by-2025-a-third-of-global-aum/
[2] https://www.trackinsight.com/en/investing-guides/esg-etfs/top-performing
[3] https://www.trackinsight.com/en/etf-news/esg-etf-investing-outlook-2022 [4] ESG assets may hit $53 trillion by 2025, a third of global AUM | Insights | Bloomberg Professional Services
[5] https://www.trackinsight.com/en/etf-news/esg-etf-investing-outlook-2022