Global asset managers are expanding investment resources dedicated to ESG, and increasing numbers of firms are adding more ESG metrics to their investment processes, according to Russell Investments' seventh annual ESG survey.
The latest survey of 369 asset managers representing $79.6 trillion in assets under management shows 82% of managers explicitly incorporate qualitative or quantitative ESG factor assessments into their investment processes, compared with 78% in last year's survey. The most growth was reported in the U.K., where 100% of managers said they incorporate those factors in 2021, compared with 87% in the 2020 survey.
Firms are also investing more resources than ever before, with significant growth in the number of managers employing investment professionals specializing in sustainable and responsible investing.
In the latest survey, 55% of respondents said they employ dedicated ESG professionals, compared with 43% in 2020.
The most growth was seen in Asia ex-Japan, where 60% of respondents said they employ ESG professionals, compared with 33% in 2020, and Canada, where 52% of respondents said they have ESG professionals on staff, compared with 26% in 2020.
In the U.S., 47% of asset managers said they employ ESG staff, up from 36% in 2020.
With more asset owners pushing for transparency into ESG factors in investment processes, 52% of survey respondents said they offer ESG-specific reporting to clients, compared with 49% in 2020.
"ESG integration within asset management investment and business practices has continued to evolve at a fast pace, with forward-looking materiality assessments being the key consideration," said Yoshie Phillips, Russell's director of investment research-global fixed income, said in a news release announcing the survey results.
"Asset managers are applying more rigorous ESG-related analysis and seeking to provide greater transparency," Ms. Phillips said. "However, there is still much progress to be made, particularly with respect to climate change, which is increasingly defining ESG agendas and ranks as the No. 1 concern among underlying clients."
The survey also found that corporate engagement was again the most frequent source of ESG-related information, with 81% of respondents selecting the category, up from 76% in 2020; while 78% said their information is primarily sourced from company reports and regulatory filings, up from 70% in 2020.
More asset managers are also using external ESG research vendors at 65%, up from 62% in 2020.