ESG found to have growing influence on active management

Active vs passiveEnvironmental, social and governance (ESG) factors are increasingly influencing the investment decisions of active managers, according to a report by Russell Investments.

More than half of active managers said they allow ESG criteria to drive investment decisions compared to 30% who were surveyed last year.

Also, over a third said they were initially motivated to integrate ESG considerations into their investment process based on the opportunity for superior risk-adjusted returns.

The survey of over 300 active management firms also found that governance was the most important ESG component, with over 80% of respondents saying they thought engagement with portfolio companies was crucial.

A recent report by NN Investment Partners found that investors following the responsible investment trend focus less on returns from social and governance investing than they do on environmental opportunities.

Implementing ESG criteria can improve the performance of both active and passive risk-factor portfolios, Lyxor Asset Management also recently claimed.

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