US investors focus more on ESG data than global peers

US institutional investors focus more on environmental, social and governance (ESG) data and social factors than their global counterparts, according to Schroders latest Institutional Investor Study.

The survey, which canvassed 750 global investors with $26.8 trn in assets, found US investors are particularly concerned about the impact on their investments as the global pressure mounts for ESG data standardisation and transparent reporting.

It revealed that less than half or 46% of US investors rely on third party ESG ratings compared to 62% of the rest of the world.

This reflects concerns over the low correlations among various ESG ratings agencies which recent academic research revealed was 0.61 on average, versus 0.99 for credit ratings agencies.

The study also noted that overall, the pandemic has sharpened institutional investor focus on sustainable investing, with 52% seeing it as a more important consideration than it was pre-Covid-19.

This view was particularly strong among European investors with 62% attaching a greater significance to sustainable investing due to the pandemic.


Globally,  performance is still an issue for 38% of respondents albiet this is down from 45% last year and 48% in the firm’s 2019 study.

However, challenges to sustainable investing remain, with greenwashing topping the list for around 59%.

The ability to measure and manage risk when investing with a sustainable focus worries 46% of investors, up from 33% in 2020.

The lack of transparency also increased as an obstacle, for 53% of investors, which was higher than 48% last year.

Around 47% of, investors showed a preference for environmental aspects of sustainability when looking for strategies, compared to 40% in 2020.

Broad sustainability-focused strategies appealed to 39% versus 33% last year, while having a specific sustainability goal such as infrastructure is the strategy of choice for 38% compared to 34% in 2020.

Health and wellness-related strategies also gained in popularity, with 37%  against 29% in 2020.

©Markets Media Europe 2021

 

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