The UBS study surveyed 450 institutional investors across North America, Europe and Asia Pacific and found that almost three in four said their investments that took ESG principles into account had performed better than non-ESG investments in the three years before 2020.
The report revealed that investors in different regional areas had varying priorities when it came to ethical investing, with Asia-Pacific investors ranking social issues the highest out of any region – 53 per cent said these issues were important.
Meanwhile, North American investors rated environmental and governance issues as highest priority, with 60 per cent and 61 per cent respectively saying these were important.
North American investors were also significantly more advanced when it came to integrating ESG principles, with 41 per cent having at least 50 per cent of their assets under management invested ethically, compared to 25 per cent in Asia Pacific and 18 per cent in Europe.
“Our clients take ESG seriously in their decision making, and sustainable investing is no longer a ‘nice to have’, but a ‘must have’,” UBS Asset Management president Suni Harford said.
“The results of this latest survey shows that ESG is both a new performance marker and a growth driver in this environment, and institutional investors are using ESG to make better investment decisions and to assess their own performance. We will continue to support our clients in their drive to integrate sustainability factors into their investment portfolios.”
The report also showed that the pandemic had accelerated institutional investor interest in ESG, with three-quarters of respondents saying they were more interested in sustainable investing as a result of COVID.
Around 26 per cent of investors also said mitigating the effects of the COVID crisis was a key driver of their interest in further ESG integration.
“The silver lining of the Covid-19 pandemic is the opportunity that investors have been given to reset their agenda,” said Candice de Monts-Petit, senior editor at the Economist Intelligence Unit, who conducted the study on behalf of UBS.
“Our research shows that the importance of integrating ESG factors into investment decisions is now well understood. Investors are increasingly developing methodologies to assess non-financial performance, aligning with impact frameworks such as the UN SDGs, and proactively engaging with companies to implement positive change.
“This shift towards sustainable finance is supporting a better future for people and planet.”
