Cerulli's survey of asset managers found none planning to stop incorporating ESG considerations into investment decisions or to stop offering sustainable investment products, although 30% said they will be more cautious about messaging in their marketing and investment documents.
Institutional investors were a bit more hesitant, with 4% saying they will no longer invest in ESG funds and 3% planning to stop incorporating ESG considerations into investment decisions, either because they no longer believe in the merits of ESG or because of the cost of responding to the anti-ESG backlash.
Cerulli found that 41% of institutional investors currently allocate to responsible investing products and strategies, while 35% plan to in the next two years.
With some anti-ESG bills assuming that investment returns may be sacrificed, asset managers are adapting or enhancing client and prospect messaging, Cerulli found, with 73% having discussions with clients and 57% creating communication pieces to address the misconceptions of ESG.
The most common approach to ESG investing was integration, with 68% of institutions using the method and another 19% planning to, while 46% of those surveyed participate in active ownership activities and 44% apply exclusionary screening.
For asset owners assessing managers' ESG capabilities, 59% rate the investment management team's track record, 56% care about senior management accountability, and 54% look at the quality of the manager's ESG integration processes, the survey found.
Regulations developed by the U.S. Securities and Exchange Commission to combat greenwashing should be helpful, many asset owners and managers said. The SEC's expanded Names Rule will be somewhat helpful, 69% of asset managers and 54% of asset owners said, and many asset managers already comply with other mandatory global rules. Asked about the SEC's ESG Rule," 65% of asset managers and 56% of investors said it will improve transparency into how managers apply ESG considerations, Cerulli found.
