Momentum builds for ESG investment, survey finds

ESG_worldOver 90% of global public investors have specific ESG (environment, social and governance) investment policies in place or are in the process of developing them, according to a survey commissioned by BNY Mellon and the Official Monetary and Financial Institutions Forum (OMFIF).

While investors are motivated to adopt ESG criteria by the potential for superior risk-adjusted returns, they still face significant barriers in scaling up these efforts, including insufficient data and the difficulty of measuring the impact and non-financial performance of their ESG investment strategies.

The survey, of 25 questions on ESG investment, reflects the responses of 27 sovereign and pension funds with combined assets under management of $4.72 trillion (€4 trillion).

The survey also found that:

  • 51% of global public investors cite insufficient data as a barrier to ESG adoption or further integration within their organisation
  • 30% of global public investors say that their existing investment mandates are incompatible with deepened sustainable investments; 38% of central banks cite this as a specific issue, illustrating the ongoing debate on how to blend central bank mandates with sustainability
  • 77% of global public investors implement ESG in their investment process
  • 42% of global public investors say they employ negative screening, the most popular method, as part of their ESG investment process

Danae Kyriakopoulou, chief economist and director of research at OMFIF, said: “The pandemic has exposed the vulnerability of financial systems to non-financial global risks.

Sustainability will be a key guiding theme as policy moves from ‘life support’ to ‘designing the recovery’.”

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