Momentum behind ESG investing has grown since the COVID-19 pandemic, according to a survey of 500 global institutional investors released Tuesday by CoreData Research.
The survey conducted in the second quarter found investors, including pension funds, endowments and foundations, sovereign wealth funds and banks, adopting more sophisticated and fully integrated strategies.
CoreData found that 51% of the global institutional investors now fully integrate ESG into their investment approaches, up from 36% in the final quarter of 2019.
North America investors lagged behind others in embedding ESG into the investment process, with 36% using full ESG integration and 30% incorporating active ownership. The highest percentage was among Asian investors, where 69% use full integration and 61% use active ownership. Active ownership strategies to engage companies on ESG more than doubled since the end of 2019, rising to 41% from 19% overall, according to the survey.
"While the trend towards ESG investing was already well underway, it seems the pandemic has further encouraged asset owners to consider the purpose and impact of their investments," Andrew Inwood, founder and principal of CoreData, said in a statement.
The survey also showed that global investors increasingly are considering their asset managers' sustainability credentials when investing, with 49% doing so in the second quarter up from 39% in the fourth quarter, although the numbers for North American investors fell to 35% from 38%.
The biggest challenges for the investors as they refine their ESG strategies were greenwashing, cited by 82%, transparency at 70%, and performance at 69%. Such factors could be holding back greater adoption of ESG, Mr. Inwood said.