Almost half of global institutional and wholesale investors said that concerns about returns, and a lack of robust data were holding back ESG adoption.
Forty-nine per cent of investors surveyed by Capital Group as part of the ESG Global Study 2021 said that a lack of robust environmental, social and governance data was the biggest barrier to ESG adoption.
Additionally, 49 per cent of the respondents raised concerns about performance or sacrificing returns.
“ESG is an increasing area of focus for institutional and wholesale investors globally,” said Jessica Ground, Capital Group’s global head of ESG.
“While investors appreciate the importance of ESG integration – and qualitative analysis and engagement by active fund managers – they also report that the lack of robust and consistent data is the main challenge when investing in ESG.”
According to Capital Group’s study, three-quarters of global investors use active funds to integrate ESG, more than twice the proportion that use passive funds and trackers.
In terms of how asset managers can most effectively engage on ESG, the four most popular methods were regular meetings with senior executives at investee companies, collective engagement, exercising voting rights, and monitoring and reporting to assess outcomes which each received support from 45 to 46 per cent of those surveyed.
Fifty-three per cent of institutional and wholesale investors said overcoming a lack of consistency in ESG scores was the greatest challenge to incorporating ESG data, ratings and research.
“It’s understandable that as ESG becomes more important to these investors, the desire to be rigorous in their assessment of ESG grows,” said Ms Ground.
