No ESG strategy for 45% of investors
Through a report* released in May, Clearwater Analytics looked at how global investors "consider, adopt and monitor ESG investment initiatives". In this study, during which almost 200 investors representing 12,000 billion dollars of assets were questioned, "only" 55% of them said they had put in place "an initiative or a policy of ESG investment". Among those who have not adopted one, 38% justified this decision by "a lack of interest from their management", 22% by "the lack of credible data to use", while 11% indicated “that they believe ESG investing leads to lower returns.” The report also highlights the fact that 45% of investors do not have “clear” responsible investing strategies.
Obtaining "good data" is a "major challenge" for investors. The survey reveals that 44% use multiple data providers, while 24% “create or enhance the data set” through their own assessments. They are, in addition, 36% to ask for a "homogenization of these sources".
As a matter of fact, before anyone can incorporate ESG factors into their investment strategies, data must be highly available, of high quality and easy to track. Only then can investors fully integrate these initiatives into their investment strategies.
The development of standards such as CSRD in Europe and the ISSB and by some extend the SEC recent proposal are all aiming at getting consistent, comparable and reliable information for investors in terms of ESG. The implementation of these initiatives may take a while though. In the meantime, investors may still need support in assessing their investment targets through an ESG lens. Our ESG Readiness Check may be a good start.