Investors with $32.7 Trillion in Global Assets Underperform in ESG
According to a study, a large and influential group of global investors claim ESG factors are not being considered for the majority of the $32.7 trillion in assets managed by their respective organisations.
In its first Voice of the Asset Owner survey, Morningstar surveyed 500 organisations from 11 countries, including insurers, multi-managers, family offices, sovereign wealth funds, and pension funds, for their opinions on green investment.
Respondents unanimously agreed that evaluating ESG problems has become increasingly important when it comes to managing money, with 85% claiming that these aspects have become material to investment policy.
But despite recognising its importance to the investment process, only 29% said ESG factors were being considered for more than half of their firm’s total assets under management.
The majority of respondents (64%) work for firms that manage more than $1 billion in assets, while 36% manage more than $10 billion and 12% manage more than $100 billion.
Impact on returns is one of the main reasons cited in the study that prevents the full implementation of ESG strategies, followed by a lack of suitable goods and client and stakeholder resistance.
However, a third of respondents believed that top management teams were the most important drivers of ESG agendas in their respective companies. External pressure and international regulations have also been mentioned as motivating factors.
Morningstar Indexes head of ESG strategy Tom Kuh said:
"As an ESG rating, data and service provider, we embarked on the Voice of the Asset Owner survey to gain better insight into the needs of our asset owner clients. Findings show ESG considerations to be a major driver of asset owner investment policy, but we’re still far from full investment portfolio implementation. Probing this mismatch, our survey uncovered the reasons why ESG implementation is a slow roll.
“We were reminded through our discussions with asset owners of all shapes, sizes and approaches around the world that ESG investing is complex as well as diverse and is progressing at different speeds and stages. We were also reminded that, despite their differences and the fact that each is on a different stage in their own ESG journey, asset owners are quite unified in their ESG commitment.”
Source: Financial News London
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