Exchange-traded funds, or ETFs, have swept through the financial world, building to a collective worth of $6.7 trillion by the second half of 2020. An ETF is a sort of hybrid between a single-company stock that’s easy to trade, and a low-cost, diversified mutual fund that spreads an investor’s risk among a selection of different companies. But this Goldilocks solution, feverishly attractive to individual and institutional investors alike, entails feasting on a measure of tainted porridge, according to a recent report by the London-based nonprofit financial think tank Planet Tracker. Investing in these funds translates to support for deforestation and other environmental damage coming from a broad swath of society, the authors write. The analysis found that 70% of the ETF market is in the grasp of three U.S. financial firms. And just four companies hold the reins to 60% of the related market for index funds, which track major market indicators such as the S&P 500 in New York or the FTSE in London. Many ETFs are pegged these indexes. That level of influence means that these companies have an outsize opportunity to end financial support for companies that clear forest — if they choose to do so, said John Willis, the report’s lead author. Land recently cleared to make way for oil palm in Indonesia. Image by Rhett A. Butler/Mongabay. Index funds, and especially ETFs, have surged in popularity in recent decades. Total investment in these products in 2020 was more than five times what it was in…This article was originally published on Mongabay Läs mer

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