Nearly two-thirds (63 per cent) of institutional investors believe the emphasis of energy stocks over decarbonization goals is the biggest detractor of the progress surrounding environmental, social and governance investment metrics, according to a survey from Amundi Asset Management.
The survey, which polled 158 institutional investors that collectively manage €1.91 trillion in assets, found respondents expressed their frustration with inadequacies in ESG data from external data vendors (62 per cent) and a lack of mandatory disclosures of ESG risks from companies (61 per cent). As well, a similar number (60 per cent) of respondents think ESG investments have become riskier after difficult returns from the bear market seen in 2022.
Despite the challenges to the current landscape of ESG metrics more than half of respondents (53 per cent) said they expect the share of ESG investing in their active portfolio to rise over the next three years, while 49 per cent said they expect the same increment for their passive portfolio.
Respondents noted that developed market equities will be the preferred asset class to pursue ESG investments over the next three years, with more than half (58 per cent) of investors listing it as their No. 1 option. Developed market bonds came in second, while developed market alternative assets finished third.
When asked about the current progress of their ESG and net-zero climate goals, respondents noted they’re already at a mature stage for each (26 per cent and 18 per cent, respectively). Meanwhile, 55 per cent said they’re at the implementation stage with their ESG investments, while 16 per cent said they’re close to planning an approach and three per cent are only still raising awareness.