Appetite for sustainable investing is accelerating rapidly worldwide with asset owners seeing it as core to the future of investing, a recent survey showed.
The survey, published by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management, revealed that 80 percent of asset owners had already integrated ESG factors into their investment process in 2019, compared to 70 percent in 2017.
The study polled 110 public and corporate pensions, endowments, foundations, sovereign wealth entities, insurance companies and other large asset owners worldwide. Ninety-two percent of participants had total assets over $1 billion.
Fifteen percent of respondent are actively considering sustainable investing adoption and 57 percent said they can envision a time when they will only allocate to investment managers with a formal approach to ESG.
“The majority of investors surveyed believe that companies with ESG-aligned practices can be better long term investments, but continue to need better reporting and data to evaluate holdings on those criteria,” Ted Eliopoulos, Vice Chairman at Morgan Stanley Investment Management said.
“Investment managers can play a critical role supporting clients as they implement tools to assess how investments align with their sustainability goals,” Eliopoulos said.
Thirty-one percent of respondents said they lack adequate tools to assess investments against their ESG goals, while 86 percent believe that investment managers can play a key role in ESG reporting and education.
For asset owners making thematic or impact investments, 88 percent seek to address environment themes, with climate change, water solutions, plastic waste and the circular economy being the top environmental issues they seek to address.
Results also showed that investors find the highest quality sustainable investing strategies in public equities (78 percent) and fixed income (69 percent).
(Writing by Gerard Aoun; editing by Seban Scaria)
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