While ESG adoption remains near peak levels among institutional investors globally, there is a sizable group of institutional investors (29%) who have placed even greater emphasis on ESG considerations as a result of the pandemic, says a new report by RBC Global Asset Management.
These investors are also the most vigorous supporters of ESG as an enabler of investment performance, as nearly all of this group (97 per cent) believe ESG-integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios, a significant difference compared to the overall global respondents who said the same (83 per cent).
Europeans most committed to ESG
While the number of investors who use ESG appears to have plateaued over the past several years, there remains a geographic divide when it comes to adopting ESG principles. European investors remain most committed to ESG adoption, with 96 per cent of European respondents using ESG in their investment approach. In contrast, U.S. investors remain the most skeptical, with 64 per cent of respondents using ESG. Although a strong majority of Canadian investors adopt ESG principles, this year saw a slight decrease, as 81 per cent of respondents said they used ESG principles – down from 89 per cent last year. Asian investors continue to show an increase in ESG adoption.
"The findings suggest that for the most ESG committed investors, the COVID-19 pandemic has highlighted the critical importance of hardwiring environmental sustainability and social equality into their investment process," said My-Linh Ngo, head of ESG Investment and Portfolio Manager at BlueBay Asset Management LLP.
The survey also found that investors are most concerned by anti-corruption, cybersecurity and climate change. Less than half of global investors say corporate boards should adopt visible minority diversity targets, almost unchanged from last year. When it came to gender diversity targets on boards 47 per cent globally said that boards should adopt targets. Engagement continues to outpace divestment when it comes to fossil fuels.