Funds and ETFs that track an ESG index without verifying each investment can find themselves in hot water if the index doesn’t screen the securities properly, as happened recently with two ETFs that track FTSE Russell ESG indices.

Taking a close look at these ETFs, we show in this short paper how quick and easy it would have been to identify a both a gun manufacturer and a fossil fuel firm using analytics tools we’ve developed together with Sustainalytics. ESG analytics tools like the Style Analytics Skyline™ can put a strong spotlight on any potential guideline violations and help ensure an ESG fund is doing what the investors expect.

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