Only one per cent of institutional investors described their organizations as non-adopters of environmental, social and governance investing criteria, according to a survey from Capital Group.

The survey, which polled 1,100 institutional investors working around the world, found two-thirds of institutional investors that hadn’t adopted ESG strategies a year ago have now done so. Another 10 per cent said their employers were on the sidelines of ESG adoption. In a similar survey released last year, three per cent reported being employed by non-adopters and 13 per cent by institutional investors on the sidelines of integration.

Read: Institutional investors set to increase focus on ESG: survey

The survey also found institutional investors were becoming increasingly interested in environmental issues and less in governance-related ones. Roughly half (47 per cent) said environmental issues were most important, up from 44 per cent in 2021. A quarter (27 per cent) prioritized governance issues, down from 31 per cent in 2021. Despite this, 79 per cent of institutional investors believe discussions of climate change have caused social issues to become overlooked.

Half (52 per cent) of institutional investors believe their organization adopted ESG criteria to improve performance or better serve the needs of asset owners. Roughly a quarter believe ESG was integrated to make a difference, while another 10 per cent believed the decision was primarily made to improve their organization’s reputation. Another 14 per cent said it was made in response to shifting industry standards or regulatory pressure.

In terms of investment strategies, nearly two-thirds (63 per cent) of institutional investors identified active funds as their preferred method for ESG integration. Roughly a quarter (23 per cent) said they prefer using hybrid funds while 14 per cent favoured passive funds.

Read: BCI, CPPIB, IMCO and PSP committing to ESG standardization in private equity