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About the report
Two years ago, we launched our inaugural Environmental, Social and Governance (ESG) Survey to better understand our client’s approach to ESG considerations in their investment decision making. Since that time the focus on Sustainability and ESG has only accelerated and intensified as the world has grappled with a global pandemic, the growing effects of climate change and social and racial inequalities. We were eager to understand what shifts have occurred and how our industry is responding. To do so we undertook an in-depth survey of 180 real assets investors globally, responsible for over $US21 trillion of assets. These are the results.
ESG is rising up the investment agenda
ESG integration and sustainable investing have moved from the edges of the investment community into the mainstream.
of respondents have a greater focus on ESG compared to two years ago
have increased allocations to investment strategies or investment managers that target specific ESG outcomes
of respondents have a dedicated ESG function
Energy Development Corporation, providing secure and safe energy to communities across The Philippines.
Risk and return drive ESG incorporation
Investors are broadly convinced that ESG factors can enhance returns and reduce risk. Around 74 per cent of respondents believe that a positive sustainability strategy improves financial returns, with most of the remainder seeing no material impact.
21% of respondents say that ESG factors govern investment decision-making – up from 10 per cent when we asked the question in 2019.
Climate is a priority – and a challenge
While climate change is the top-ranked ESG issue, most investors are yet to make their own commitments, and they lack the tools they need to address the problem.
of survey respondents identified climate change as their highest ESG priority
of investors track some or all portfolio emissions
of respondents have not made a commitment to the goals of the Paris Agreement
Puget Sound Energy, delivering resilient energy for Washington State
Americas, Asia at an inflection point?
Survey responses chime with market perception that the Americas and Asia lag Europe regarding ESG integration – but they suggest the gap is likely to close. For example, 81 per cent of respondents in the Americas expect to significantly increase allocations to investment strategies or managers that target specific ESG outcomes and about 74 per cent in ANZ, compared with 91 percent in EMEA.
Port of Newcastle, ensuring a sustainable future for the port and people of Newcastle, Australia.
Looking ahead: changing objectives for ESG integration
As investors deepen their ESG integration, their objectives are beginning to change. Moving from a focus on process to a focus on outcomes, they want to be able to demonstrate that their investments can have real-world social and / or environmental outcomes. There has been a marked increase in analysis and disclosure of non-financial ESG outcomes over the previous two years, with 16 per cent of investors reporting significantly, and 49 per cent somewhat increased activity. This effort is expected to accelerate over the coming years.
ESG on an upward curve
Demand for ESG analysis, integration and investment products is set for continued strong growth even as the investor community continues to face challenges incorporating ESG factors into their investment decision making.
of participants expect to increase allocations to investment strategies that integrate sustainability practices over the next two years
expect to increase commitments to products or managers that target specific ESG outcomes over the coming two years
In MAM, we believe in investing to deliver a positive impact for everyone. This means putting sustainability at the heart of what we do. From developing sustainability-themed products to meet investor demand, to decarbonising our existing portfolio to meet our ambitious net zero commitment, to working with our portfolio companies to improve their performance on a wide range of environmental, social and governance topics.
Find out more about our approach to Sustainability in our most recent Sustainability Report.