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Institutions increase ESG focus in 2018

At the start of 2018, public pension plans and insurance companies accounted for about 91% of institutional assets focused on environmental, social and governance factor investing, with educational institutions a distant third at 6% of total ESG assets. The U.S. SIF Foundation surveyed 496 institutional investors managing an aggregate $5.6 trillion in ESG-focused assets.

Screens focused on removing exposure to specific consumer products rose the most in 2018 compared to data collected in 2016. Those screens involved $2.9 trillion in managed assets, up from $1.5 trillion, a 90% increase. Socially screened assets increased about 20%, but still represent the largest factor screen. Assets may fall into multiple factor screen categories, so overlap is expected. Socially based factors have historically been the most common ESG screen, and 2018 data represent about 94% of the total institutional assets surveyed.

Among the top specific issues, almost $3 trillion was screened for conflict risks, or companies that support terrorism or repressive regimes, directly or indirectly. Filtering out tobacco companies increased 121% since 2016 to $2.56 trillion, while issues surrounding corporate governance increased 40% on average.