Institutional investors increasingly interested in ESG factors: survey

A third (33 per cent) of institutional investors that haven’t yet incorporated environmental, social and governance factors into their investment decisions said they’re considering it, according to a new survey by investment consulting firm Callan. 

The annual survey, which polled 102 U.S. institutional investors this summer, found the percentage is the highest rate of ESG interest in the survey’s history and nearly three times the result from 2019.

“We believe the move toward more ESG incorporation is consistent with the long-term investment approach of institutional investors,” said Tom Shingler, senior vice-president and chair of Callan’s ESG committee, in a press release.

Read: Most Canadian institutional investors engaging in ESG issues: survey

Indeed, 42 per cent of institutional investors said they already incorporate ESG factors into investment decisions, which mirrors the 2019 survey result but is nearly double the finding of 22 per cent from Callan’s first survey in 2013. Meanwhile, public plans have incorporated ESG factors into investment decisions at a slightly higher rate (36 per cent) than their corporate counterparts (32 per cent).

For all investors, endowments remained the top ESG incorporator, with those surveyed increasing their adoption rate to 63 per cent in 2020, compared to 58 per cent in 2019. Despite the trend toward adoption, 56 per cent of respondents said they haven’t incorporated ESG into investment decision-making, citing unproven or unclear benefits as the main rationale.

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