The percentage of institutional investors incorporating ESG factors continues to grow, but so does the divergence between U.S. investors and those in other countries, according to RBC Global Asset Management's annual Responsible Investment Survey released Wednesday.
The 2020 survey of 809 institutional asset owners, investment consultants and financial advisers found that 75% of them use ESG factors in their investment strategies, up from 70% in 2019. Nearly 13% of respondents were pension plan sponsors.
Overall, more than 84% of survey respondents believe ESG-integrated portfolios perform as well or better than other portfolios, but U.S. investors were more skeptical, the survey found. Compared to rising percentages in Canada at 97.5%, Europe at 96% and Asia at 93%, only 74% of U.S. investors believed the same, down from 78% in 2019.
Respondents also diverged when asked about the ability of ESG-integrated portfolios to generate long-term sustainable alpha and to mitigate risk, with 60% of U.S. investors unsure or unconvinced.
For 28% of respondents, the COVID-19 pandemic is causing them to place more importance on ESG considerations, and 53% reported interest in more disclosure on social factors, such as employee health care and workplace culture.
"We expect that the effects of COVID-19 will have implications on investor sentiment for years to come," said Melanie Adams, vice president and head of Corporate Governance and Responsible Investment at RBC Global Asset Management.
Among the 18 ESG concerns addressed in the survey, anti-corruption ranked first, followed by climate change and shareholder rights. Climate change moved up from fourth place in 2019 — except for the U.S. where it ranked sixth — while shareholder rights rose from eighth place in 2019.