A lack of consistent and standardized environmental, social and governance information from money managers is a challenge for 84% of global institutional investors, according to a survey conducted by consultant bfinance.
Asked how much of a challenge the lack of consistent, standardized data presented, 55% of respondents said it was a "major challenge," 29% said it was a "minor challenge," 6% said it was not challenging, while the remainder said the issue was not relevant.
Bfinance surveyed 256 senior executives at pension funds, endowments and foundations, insurance companies, family offices and other types of investors, who oversee a combined $7 trillion in assets.
Half of executives said they have difficulties in finding external managers' strategies that align well with their own ESG approach.
ESG was also a primary or major factor in at least one manager termination for 19% of executives. Comparative figures were not available.
When selecting managers, 60% of respondents said ESG criteria are important, up from 41% in the 2018 survey. Investors also said they had stricter ESG manager selection criteria compared to three years ago. A large proportion of them is unlikely to hire managers that, for example, are not signatories of Principles for Responsible Investment or do not have a dedicated ESG headcount.
Of those surveyed, 1 in 3 investors said the coronavirus pandemic has made them pay greater attention to ESG matters within their own institutions, particularly to diversity.
In total, 48% of asset owners globally said that ESG considerations are highly important in to their investment approaches, while 39% said these factors were moderately important.
By region, 61% of European investors prioritize ESG in their investments and consider it highly important. Elsewhere, 33% of Asia-Pacific-based respondents and 24% of investors in North America said prioritizing ESG in their investments was of high importance.
When it comes to approaches to ESG integration, 46% of investors said they evaluate carbon emissions against overall portfolios, up from 13% three years ago. Also, 28% of investors now map the portfolio against the United Nations' sustainable development goals, up from 3% three years ago.
Most investors integrate relevant ESG factors into specialist asset classes, including 67% of private debt portfolios, 55% of emerging market debt portfolios and 76% of private equity portfolios. Comparative figures from previous surveys were not available.
The survey was conducted in December.
