Sixty-eight percent of institutional investors globally consider responsible investing important to their organization to some degree, said an Aon Hewitt Investment Consulting survey released Tuesday.
A belief that incorporating environmental, social and governance factors resulted in better investment decisions was cited as the most popular reason for ESG integration (39% of investors), followed by a desire to impact global issues (26%).
The biggest hurdle for responsible investing, according to more than 38% of investors, was a lack of consensus about its impact on investment returns.
Asked what would make responsible investing more accessible, investors cited better or more consistent data on ESG factors (53%), compelling research on return profiles (50%), industry agreement on terms and definitions (49%) and agreement on ESG factors' materiality (49%).
Fossil fuels/carbon footprint and climate change were listed as the top ESG concerns globally, according to 43% and 42% of investors, respectively, followed by governance issues like bribery and corruption (37%) and weapons manufacturing/military complex and renewable energy (both 36.5%).
Broken out geographically, climate change was the biggest concern for investors in the U.K., European Union/Continental Europe and Canada, and the second biggest concern for investors in the U.S. Concerns about nationalism ranked first in the U.S.
Other findings from the inaugural survey include:
- 40% of respondents have a responsible investment policy in place, while another 14% said they are in the process of developing a policy. Endowments and foundations were the most likely to have responsible investment policies.
- Investors in the EU/Continental Europe were the most likely to have a dedicated ESG staff (28%).
- The majority of investors (57%) delegate responsible investing authority to external managers or consultants; 32% express their ESG initiatives through long-only investments and 20% through shareholder engagement or proxy voting.
"While responsible investing is still relatively nascent in many organizations and geographies, overall interest in these initiatives has skyrocketed over the past few years," said Meredith Jones, partner and head of emerging manager research at Aon, in a news release on the survey findings. "We've gone from clients asking sporadically about responsible investing to full-scale development of policies, implementation of responsible investing initiatives and a veritable sea change in how investors and asset managers incorporate and evaluate responsible investing data into their investment strategies."
Aon surveyed 223 investors, including public and corporate defined benefit plans, defined contribution plans, endowments and foundations. The majority of Aon's respondents where based in the U.K., followed by Canada, European Union/Continental and the U.S.
The full report is available on Aon's website.