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ESG integration matures, but some institutions lag on climate goals

net_zero_sustainable_investingESG integration is maturing amongst the investment management community, although institutional investors are at different stages of commitment to net zero emissions, according to a study by BNP Paribas. 

Over 20% of investors are now integrating ESG in at least 75% of their portfolio, the survey of 356 asset owners, official institutions, and asset managers found.  In BNP Paribas’s 2019 ESG survey, not one respondent envisaged this would be the case for 2021.

Despite this, 66% of respondents currently incorporate ESG into less than half of their portfolio, while less than 40% have made a public commitment to align all or part of their portfolio with a 2050 net zero goal.

Some 36% of those surveyed have taken initial public steps but have not yet begun allocating capital to a net zero emissions objective, while 27% have made no such climate commitment at all.

Thematic investing, meanwhile, appears to be on the rise with 56% of institutions using negative screening and more than a third using thematic investing, the report stated.

Florence Fontan, head of company engagement at BNP Paribas Securities Services, highlighted that the industry had come a long way since the firm carried out its first ESG survey in 2017.

“Asset managers are now more likely to embed ESG within their organisation and strategic decision-making. They’re also embracing thematic investing,” Fontan said.

“This should stand the industry in good stead to accelerate asset allocation to ESG strategies, an urgent necessity as warnings on climate change grow starker.”

BNP Paribas's ESG survey is based on data collected between April and May 2021 from institutional investors with an estimated $11.3 trillion (€9.6 trillion) in assets under management.

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