When considering environmental, social and governance issues, asset managers are less convinced that social factors drive returns, according to a survey by Netherlands-based NN Investment Partners.
Among the European asset managers surveyed, just 15 per cent said social factors are something they can harness to generate returns. This compares to 40 per cent that said the same of governance factors and 66 per cent that said they see the potential of environmental issues.
Breaking down specific environmental factors, 87 per cent of respondents said the energy transition away from fossil fuels towards renewables has considerable potential to drive returns. Further, 81 per cent said the same of climate change and 78 per cent for pollution.
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French investors had the most balanced views between the three factor types, with 35 per cent saying social issues have return-driving potential, which, while still low, is significantly higher than the average.
“It is interesting to see that opinions differ so sharply from one country to another; for example, that Dutch professional investors focus so heavily on the environmental factor and so little on social aspects when it comes to return potential,” said Adrie Heinsbroek, principal of responsible investment at NN Investment Partners, in a press release.
“Currently, environmental issues are high on the political and economic agenda as there is a clear correlation with returns, so it is not necessarily surprising that investors tend to focus more on the ‘E’ of ‘ESG’. Climate change, pollution and global warming are prominent issues and positive impact is, for example, in terms of reduced CO₂ emissions or waste, more quantifiable and easier to report on. But from a portfolio diversification perspective, it is important to also look at social and governance factors as these criteria can also help pinpoint plenty of opportunities.”
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