ESG investing has become more appealing to investors who believe that companies that treat their employees, shareholders and the environment well will perform better long term. Will the Trump administration’s policy of decreased regulation make it easier for companies to ignore ESG principles, and how will investors respond? Increased participation in proxy votes by managers and investors suggests ESG has staying power.
Assets grow: The US SIF Foundation found a total of $8.7 trillion in U.S.-domiciled ESG-focused assets held by managers and institutions. Listed U.S. vehicles make up $2.6 trillion of those assets, managed across 1,002 products; two-thirds of assets are managed in mutual funds.
Assets by category: U.S. investors have moved away from a focus on sector divestment toward businesses that operate soundly. The focus on environmental factors has shown more relative growth than other factors in recent years for both investors as a whole and the institutional subset.
Who's buying? Public plans are the most active ESG investors, focusing on divesting from conflict areas, while corporate plans focus their efforts more on environmental factors, particularly climate change and carbon emissions.
Comparable returns: Performance results across ESG universes compared to their broad-market counterparts are encouraging − ESG returns have kept pace at lower levels of risk.
*Categories are not mutually exclusive and will overlap. Sources: U.S. SIF Foundation; Bloomberg LP; Callan; eVestment Alliance
Compiled and designed by Charles McGrath and Gregg A. Runburg