Some 70% of institutional investors in Canada, the U.S. and the U.K. apply ESG principles to investment decisions, according to the 2019 RBC Global Asset Management Responsible Investing Survey released Wednesday.
A major reason for that is the belief that an ESG approach can mitigate risk and enhance returns, with 53% of respondents citing those factors.
RBC GAM officials see signs that adoption of ESG investment strategies is starting to mature. After two consecutive years of rapid growth, the percentage of institutional investors in 2019 saying they use ESG principles as part of their investment approach and decision-making process remained relatively flat, at 70% overall. In the U.S., ESG adoption was 65%, but it was 97% in the U.K. and 80% in Canada.
"This new data confirms that while the multiyear trend of rapid increases in ESG adoption by institutional investors may be tapering off, the vast majority of these asset owners are still committed to using ESG principles in their investment process," said Melanie Adams, RBC GAM vice president and head of corporate governance and responsible investment, in a statement.
This year's survey also found that institutional investors are more likely to choose active management for their ESG portfolios, despite more passive management in general. Overall, the average level of ESG portfolios actively managed was 61%, with 28% of respondents reporting that their entire ESG-based portfolio is actively managed, and 10% reporting their entire ESG-based portfolio is passively managed.
Cybersecurity was the biggest ESG concern globally, with 67% of respondents saying they were concerned or very concerned about it, followed by 66% who were concerned with anti-corruption, the survey found.
Europe and the U.K. combined ranked climate change as the top concern, while in Canada it was anti-corruption and in the U.S., cybersecurity.