Institutional investors, particularly those in North America, are still in the early stages of integrating ESG investments into their portfolios, according to a global study released Wednesday by CoreData Research.
The London-based organization surveyed 800 institutional investors with a collective $16 trillion in assets under management, including pension funds, endowments, foundations, sovereign wealth funds, private banks, insurance companies and money managers in Europe, North America, Latin America and Asia, during the second quarter.
Overall, only 37% are considered ESG embedders, with a high degree of corporate engagement, and sustainable and impact investing. The majority, 52%, are early stage adopters using a combination of negative screening, positive screening and investment decision integration.
Only 11% of the investors surveyed reported no use of ESG considerations, CoreData found.
On a scale of 1 to 10 created by CoreData to gauge regional levels of engagement with various ESG strategies, Europe had the highest score, at 5.1, while North America had the lowest score at 3.6, compared to a global average of 4.2.
Craig Phillips, head of CoreData Research International, said in a statement that while institutional investors increasingly incorporate ESG considerations in their investment processes, "many are at the first level of adoption" and may be restricted by a reliance on in-house capabilities and resources.
Europe's higher score could be explained by governmental and regulatory support for ESG investing, Mr. Phillips said. "While European regulators push for greater ESG disclosure from investors, Europe is playing a leading role in the fight against climate change," he said. "This drive seems to be impacting investor attitudes towards sustainability."