The coronavirus pandemic has sharpened institutional investor focus on sustainable investing, with 52% of respondents to a survey citing it as a more important consideration than it was pre-COVID-19.
That view was particularly strong among European investors, 62% of which now attach a greater significance to sustainable investing due to the COVID-19 pandemic.
Schroders' latest "Institutional Investor Study," covering views from 750 global investors with $26.8 trillion in assets, also found that investors are less concerned than ever that investing sustainably may hamper performance.
Thirty-eight percent of respondents expressed concerns over performance when incorporating sustainable investing into portfolios, down from 45% last year and from 48% in the firm's 2019 study.
However, challenges to sustainable investing remain, according to respondents. Greenwashing was the biggest issue for investors, at 59%, down slightly from 60% in last year's survey. The ability to measure and manage risk when investing with a sustainable focus worries 46% of investors, up from 33% in 2020. The lack of transparency also increased as an obstacle, for 53% of investors vs. 48% last year.
Investors showed a preference for focusing on environmental aspects of sustainability when looking for strategies, at 47% vs. 40% in 2020. Broad sustainability-focused strategies appealed to 39% of investors this year, vs. 33% last year; while having a specific sustainability goal such as infrastructure is the strategy of choice for 38% of investors, up from 34% last year. Health and wellness-related strategies also gained in popularity, with 37% of investors seeking this type of strategy vs. 29% in 2020.