The Global Sustainable Investment Report
To facilitate understanding of sustainable investment, the report divides its content into two main parts: impact investment, which seeks positive social and environmental outcomes, and ESG investment, which focuses on environmental, social, and governance factors.
Overview of Global Sustainable Investment
The report reveals that 37% of respondents have integrated sustainable investment principles into their portfolios, showing an increase from 30% recorded two years ago. Additionally, 20% of respondents have had sustainable investment experience for over two years, while 15% have been engaged in such practices for more than one year.
Regarding the core factor influencing investment decisions, the number of proponents for both performance and sustainability has grown compared to two years ago. This suggests a rising interest in sustainable investment as well as those who are against it. Interestingly, the report notes an increase in inquiries about asset sustainability, rising from 17% to 25%, and an upsurge in sustainable asset allocation, growing from 27% to 34%.
Asset Types for Sustainable Investment
The report highlights that private equity managers lead in adopting sustainable investment methods, with 73% of them employing such strategies. Following them are stock managers and real estate managers, while hedge fund managers show the lowest adoption rate (less than 10%) due to challenges in linking their investment strategies to sustainability.
Concerns expressed by respondents regarding sustainable investment.
Despite over 75% of respondents acknowledging the importance of integrating sustainability into investment processes, the percentage of those not interested in sustainable investments has increased from 11% two years ago to the current 23%. While early advocates of sustainability have garnered attention, some respondents now perceive these principles as not entirely suitable for inclusion in investment portfolios.
Interestingly, respondents' concerns about sustainable investment vary by region. A significant number of respondents who consider performance as the core factor come from North America (35 out of 46), constituting 28% of total North American respondents. On the other hand, only 7 respondents from Europe hold this view, accounting for 18% of total European respondents. Furthermore, some respondents have started avoiding expressing their views on ESG practices publicly to reduce investor resistance, with 51% of respondents limiting their recommendation of sustainable assets after conducting due diligence.
Survey Findings: ESG Investing Trends and Diverse Manager Perspectives
Regarding ESG investing, 51% of respondents utilize ESG factors to assess the inclusion of investees in portfolios and mitigate potential risks. However, only 44% are still tracking and reporting related risks continuously. Managers have varying opinions on defining an ESG portfolio, with some suggesting a limited inclusion of non-ESG assets while others advocate for a more substantial proportion of ESG assets.
In the context of impact investing, 63% of respondents have already adopted an impact investing strategy, and an additional 13% are in the process of developing one. Among the investment managers involved in impact investing, 33% have five years of experience, indicating a growing interest in this market. North America leads in impact investing with 51% of respondents offering these strategies for at least five years, higher than Europe's 27%.
The report highlights energy (62%), climate (60%), and agriculture (44%) as the most prominent themes in impact investment, while topics such as air (23%), land (23%), and ocean (20%) have relatively lower participation, possibly due to a lack of knowledge and fewer allocated funds in these areas.
Reference: 2023 Sustainable Investment Survey
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