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ESG ETFs continue a fire streak and every single Wallstreet mainstay is launching funds as fast as they can. Goldman launched their latest fund this week Goldman Sachs Bloomberg Clean Energy Equity ETF which will be traded with the ticker GCLN. It will hopefully capitalize on the US transition to clean energy with a strong focus on equities. ESG has a strong track record as last year 13 ESG index funds with large caps crushed the S&P 500 with an almost 30% return. Goldman thinks the ESG movement is just in its infancy and this fund is a long-term strategy.

Finsum: The rapid growth in ESG funds is starting to teeter on bubble territory, but that bubble could pop a long time from now.

The latest data from MSCI Inc. regarding the environmental social and governance criteria gave updates to America’s largest Financial companies like Wells Fargo, Citigroup, and Morgan Stanley. However, some are accusing rating agencies of ‘greenwashing’ the criteria because these same companies lent a combined $74 billion to fossil-fuel companies. This is the exact reason the SEC is looking to step into ESG ratings in one of their latest announcements. In fact, only 3 lenders in the S&P 500 received ESG rating downgrades. This is mostly because MSCI only considers the fraction of loans to polluters, not their total value.

FINSUM: Total existing outward loans might just be a way the SEC could come down on future ESG rating regulation if these stories gather more headlines.

ESG has been one of the fastest-growing stories of 2021 and has taken over every other headline with it. However, things could be shifting in 2022 for ESG, and fund leaders see things shifting for ESG in 2022. The first big area of change will be talent and analysts more catered to addressing and differentiating ESG content. Investors will also face greater scrutiny from compliance officials and regulators, and language will be more cautious moving forwarded. Finally, investors themselves will definitely demand more than just a green label, but rather specifics of how companies are meeting and leading the way in ESG.

FINSUM: If 2021 was the year of explosion in ESG and impact investing, 2022 will be marked by how regulators tightened the reigns on this explosive industry.

Environmental, Social, and Governance standards have, up until this point, been an opt-in style strategy to give an edge in debt and equity markets, but that could all be changing. The CEO of Norges Bank Investment, the world's largest stock owner, says that corporate life is only going to be more difficult for firms that don’t meet ESG standards. Market pressures are going to rapidly change and firms will have a difficult time raising finances, maintaining employees, and retaining customers if they aren’t part of a green future. Norges plans to utilize its market power to apply a lot of pressure, one such way is by giving companies expectation documents. They believe companies won’t be profitable in the long run if they don’t commit to ESG.

FINSUM: This strategy of pressuring companies through divestment has been shown to not necessarily be effective in holding them accountable and transitioning them into a greener world.

With 2021 almost coming to a close it's worth looking back at the biggest ESG funds of the last year, and three have stood out in a very saturated market. Goldman’s Future Planet Equity ETF is an active fund that addresses environmental problems and has raked in $107m since its launch in mid-July. Invesco’s MSCI Sustainable Future ETF focuses on corporations utilizing natural resources more efficiently and has outperformed the previous Goldman’s Future Planet fund by 4.7% since July. Finally, the Humankind U.S. Stock ETF is an ESG focused fund that is weighted by proprietary data and varies greatly from the traditional cap-weighted ETF. HKND has raised over $106 million since its launch in February.

FINSUM: These are stand out performers in a highly saturated market, equity focused ETFs are the route to take as far as ESGs.