Most institutional investors believe they are instrumental in addressing global environmental, social and governance issues, results of a survey released Tuesday by Natixis Investment Managers said.
Of the 500 global institutional investors surveyed, 96% said they have an important role to play in such challenges as climate change, social and economic inequality and the need for infrastructure development.
Six in 10 asset owners would be more willing to invest in projects that help provide solutions to societal challenges if the projects presented a risk/return profile in line with their portfolios' long-term goals.
Nearly half of investors surveyed by Natixis — 48%— said that institutions should put capital to work to address ESG issues, while 48% believe institutions should champion corporate governance, including enhanced diversity and inclusion policies and practices, and 49% feel they should use their clout to influence the policies and actions of companies in which they invest.
"Institutional investors must now find ways to meet their mandates in a world that's even more yield-starved while facing unprecedented social, political, financial and environmental threats," said David L. Giunta, president and CEO for the U.S. at Natixis Investment Managers, in a news release announcing the survey results. "We're seeing institutions draw on a wider variety of assets and resources now more than ever to achieve their long-term objectives."
While institutions say their main reason for integrating ESG is to align their portfolios with their firm's values, they also see a strong case for sustainable investing strategies. The survey showed that 65% of asset owners believe ESG analysis has a valid place alongside fundamental analysis, and 54% say there's alpha to be found in ESG. Seventy percent expect ESG to become a standard practice across the industry within the next five years.
The survey shows that 78% of institutions are invested in sustainable infrastructure projects, many of which offer the potential to generate social, economic and environmental benefits alongside financial returns.
While 32% are looking to increase their allocations to infrastructure, 34% are concerned about the associated risks, particularly in emerging and frontier markets. In addition, 31% worry that there are no clear measurement standards.