Some 90 per cent of institutional investors believe environmental, social and governance (ESG) integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios, according to a new global survey by RBC Global Asset Management.
The results also reveal that adoption of responsible investing is growing steadily as the focus of institutional investors moves from “whether to” to “how to” implement a responsible investment approach.
The survey indicates that ESG-based investing has established a solid position alongside other fundamental investment approaches. There is also a growing interest in applying ESG principles to diverse asset classes, including fixed income and infrastructure.
“This new data confirms that the majority of institutional investors and consultants have either adopted ESG principles or are actively looking at how to do so,” said Judy Cotte, vice president and head of Corporate Governance and Responsible Investment at RBC Global Asset Management.
Asset managers have a duty to consider ESG
“Importantly, many institutional asset owners now believe they have a duty to consider a responsible investing approach. This ongoing shift has significant implications for how large institutional asset pools are allocated, as well as the advice and service provided by consultants and asset managers.”
The report, called Responsible Investing: Charting a Sustainable Advantage, is RBC GAM's third annual survey of institutional investors’ perceptions and intentions regarding responsible investing.
It indicates that a full 38 per cent of survey respondents believe integrating ESG factors can help generate alpha, a 14 per cent increase over 2017 results. However, it also notes that 42 per cent of respondents say they aren't sure this is true.
The survey also shows that more than half of respondents who incorporate ESG factors into their investment approach say they consider this to be part of their fiduciary duty – double the percentage who said so last year.
Gender diversity on corporate boards continues to be important with 42 per cent of institutional investors supporting shareholder proposals as an effective means to achieve gender diversity on boards.