2019 | 37 | 69-86
Article title

Sustainable investing exchange-traded funds: US and European market

Title variants
Languages of publication
Aim/purpose – The key aim of the paper is to examine the diffusion of the sustainable investing Exchange-Traded Funds (ETFs) on the European and US ETFs markets, with the special focus on the market shares of sustainable investing and conventional funds. Design/methodology/approach – The model of diffusion of innovation (logistic growth model) is applied. Monthly data on the assets of ETFs in the time period of 2006-2017 are used. Findings – Increasing assets of sustainable investing ETFs were identified in both examined regions. The average value of assets was higher in the United States, but the European market became larger in the late 2017. Exclusively for Europe, the diffusion of sustainable investing ETFs was confirmed for the entire analysed time period as the market share of this category was increasing in relation to the conventional funds. In the United States, the diffusion was short-lived and took place in the time period 2006-2008. Research implications/limitations – Applied diffusion models assume an S-shaped trajectory of the innovation’s diffusion and the estimations are sensitive to historical data. Originality/value/contribution – It is the first study to apply the methodological framework of innovation diffusion for the examination of the sustainable financial products. It addresses an issue of switching between sustainable investing and conventional financial products that has not been examined previously.
Physical description
  • Department of Economic Science. Faculty of Management and Economics. Gdańsk University of Technology, Gdańsk, Poland
  • Abner, D. (2016). The ETF handbook. How to value and trade exchange-traded funds (2nd ed.). Hoboken, New Jersey: John Wiley & Sons.
  • Agapova, A. (2011). Conventional mutual index funds versus exchange-traded funds. Journal of Financial Markets, 14(2).
  • Alexopoulos, T. A. (2018). To trust or not to trust? A comparative study of conventional and clean energy exchange-traded funds. Energy Economics, 72, 97-107.
  • Auer, B. R., & Schuhmacher, F. (2016). Do socially (ir)responsible investments pay? New evidence from international ESG data. The Quarterly Review of Economics and Finance, 59, 51-62.
  • Bioy, H., & Lamont, K. (2018, May). Passive sustainable funds. Morningstar Manager Research, 1-33. Retrieved from
  • Borgers, A., Derwall, J., Koedijk, K., & Horst, J. (2015). Do social factors influence investment behavior and performance? Evidence from mutual fund holdings. Journal of Banking & Finance, 60, 112-126.
  • Busch, T., Bauer, R., & Orlitzky, M. (2016). Sustainable development and financial markets: Old paths and new avenues. Business & Society, 55(3), 303-329.
  • Chen, X., & Scholtens, B. (2018). The urge to act: A comparison of active and passive socially responsible investment funds in the United States. Corporate Social Responsibility and Environmental Management, 25(6).
  • Crigger, L. (2018, March). Where are the ESG flows? ETF Report, 6-8.
  • Derwall, J., Koedijk, K., & Ter Horst, J. (2011). A tale of values-driven and profit-seeking social investors. Journal of Banking & Finance, 35(8), 2137-2147.
  • Djoutsa Wamba, L., Braune, E., & Hikkerova, L. (2018). Does shareholder-oriented corporate governance reduce firm risk? Evidence from listed European companies. Journal of Applied Accounting Research, 19(2), 295-311.
  • Dosi, G., & Nelson, R. R. (1994). An introduction to evolutionary theories in economics. Journal of Evolutionary Economics, 4(3), 153-172.
  • ETFGI. (2018). Global ETF and ETP industry insights – June 2018. Retrieved from
  • Eurosif. (2018). European SRI Study 2018. Retrieved from
  • Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: Aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5(4), 210-233.
  • Gastineau, G. L. (2010). The exchange-traded funds manual. Hoboken, New Jersey: John Wiley & Sons.
  • Global Sustainable Investment Alliance. (2017). 2016 Global Sustainable Review. Retrieved from
  • Halbritter, G., & Dorfleitner, G. (2015). The wages of social responsibility – where are they? A critical review of ESG investing. Review of Financial Economics, 26, 25-35.
  • Hale, J. (2017). Sustainable funds start to perform. Morningstar Research & Insights. Retrieved from
  • Hale, J. (2018, January). Sustainable funds U.S. landscape report. Morningstar Research, 1-48. Retrieved from
  • Hill, J. M., Nadig, D., & Hougan, M. (2015). A comprehensive guide to exchange-traded funds (ETFs). Charlottesville, VA: CFA Institute Research Foundation.
  • Hull, I. (2016). The development and spread of financial innovations. Quantitative Economics, 7, 613-636.
  • Krosinsky, C. (2017). The seven tribes of sustainable investing. In C. Krosinsky & S. Purdom, Sustainable investing (pp. 29-32). London: Routledge.
  • Kwasnicki, W. (2013). Logistic growth of the global economy and competitiveness of nations. Technological Forecasting and Social Change, 80(1), 50-76.
  • Lechman, E. (2015). ICT diffusion in developing countries. Towards a new concept of technological takeoff. Switzerland: Springer International Publishing.
  • Leite, P., & Cortez, M. C. (2018). The performance of European SRI funds investing in bonds and their comparison to conventional funds. Investment Analysts Journal, 47(1), 65-79.
  • Lettau, M., & Madhavan, A. (2018). Exchange-traded funds 101 for economists. Journal of Economic Perspectives, 32(1), 135-154.
  • Levitt, A. (2017). Five sustainable investing trends in 2017. Retrieved from
  • Mansfield, E. (1961). Technical change and the rate of imitation. Econometrica: Journal of the Econometric Society, 29(4), 741-766.
  • Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268-305.
  • Marszk, A., & Lechman, E. (2018). New technologies and diffusion of innovative financial products: Evidence on exchange-traded funds in selected emerging and developed economies. Journal of Macroeconomics, in press.
  • Meyer, P. (1994). Bi-logistic growth. Technological Forecasting and Social Change, 47(1), 89-102.
  • Meyer, P. S., Yung, J. W., & Ausubel, J. H. (1999). A primer on logistic growth and substitution: The mathematics of the Loglet Lab software. Technological Forecasting and Social Change, 61(3), 247-271.
  • Meziani, A. S. (2016). Exchange-traded funds. Investment practices and tactical approaches. London: Palgrave Macmillan.
  • Moon, J. (2007). The contribution of corporate social responsibility to sustainable development. Sustainable Development, 15(5), 296-306.
  • Narula, K. (2012). ‘Sustainable Investing’ via the FDI route for sustainable development. Procedia-Social and Behavioral Sciences, 37, 15-30.
  • Nofsiger, J. R., Sulaeman, J., & Varma, A. (2016). Institutional investors’ socially responsible investments: It Just makes (economic) sense. Retrieved from
  • Paetzold, F., & Busch, T. (2014). Unleashing the powerful few: Sustainable investing behaviour of wealthy private investors. Organization & Environment, 27(4), 347-367.
  • Paetzold, F., Busch, T., & Chesney, M. (2015). More than money: Exploring the role of investment advisors for sustainable investing. Annals in Social Responsibility, 1(1), 195-223.
  • Przychodzen, J., Gómez-Bezares, F., Przychodzen, W., & Larreina, M. (2016). ESG issues among fund managers – factors and motives. Sustainability, 8(1078).
  • Revelli, C., & Viviani, J. L. (2015). Financial performance of socially responsible investing (SRI): What have we learned? A meta‐analysis. Business Ethics: A European Review, 24(2), 158-185.
  • Sahut, J. M., & Pasquini-Descomps, H. (2015). ESG impact on market performance of firms: International Evidence. Management International/International Management/ Gestiòn Internacional, 19(2), 40-63.
  • Satoh, D. (2001). A discrete bass model and its parameter estimation. Journal of the Operations Research Society of Japan, 44(1), 1-18.
  • Schmitz, A. (2017). Why ETFs don’t work for sustainable investors. Retrieved from
  • Schoenmaker, D. (2018). Sustainable investing: How to do it. Bruegel Policy Contribution, 2, 1-12. Retrieved from
  • Swiss Sustainable Finance. (2017). Handbook on sustainable investment. Background information and practical examples for institutional asset owners. Zurich: Swiss Sustainable Finance & CFA Society Switzerland. Retrieved from http://
  • Trudel, R. (2019). Sustainable consumer behavior. Consumer Psychology Review, 2(1), 85-96.
  • Utz., S., & Wimmer, M. (2014). Are they any good at all? A financial and ethical analysis of socially responsible mutual funds. Journal of Asset Management, 15(1), 72-82.
  • Waygood, S. (2008). Civil society and capital markets. In C. Krosinsky & N. Robins (Eds.), Sustainable investing: The art of long-term performance (pp. 177-188). Abingdon-on-Thames: Earthscan.
  • Weber, O. (2014). The financial sector’s impact on sustainable development. Journal of Sustainable Finance & Investment, 4(1), 1-8.
  • Yan, S., Ferraro, F., & Almandoz, J. (2019). The rise of socially responsible investment funds: The paradoxical role of the financial logic. Administrative Science Quarterly, 64(2).
Document Type
Publication order reference
YADDA identifier
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.