More investors are integrating ESG in at least 75% percent of their portfolio, according to BNP Paribas, contrasting its own survey from 2019 where zero respondents envisaged this to be the case by 2021.
The survey of 356 asset owners and asset managers with a combined $11.3 trillion in assets under management found that today, 9% of investors surveyed integrate ESG into more than 75% but less than 100% of their portfolios, while 13% incorporate ESG into all of their investments.
On the other hand, 66% of investors currently incorporate ESG into less than half of their portfolio, still exceeding previous expectations.
In two years’ time, 34% of surveyed investors intend to incorporate ESG into at least 75% of their portfolios, showing an increased interest in ESG in investments as a whole.
In other findings by the survey, the top motivations for ESG investing have shifted over the last two years.
Originally, improved long-term returns was the main ESG driver, however brand and reputation has overtaken returns as the top ESG driver, growing from 47% in 2019 to 59% this year.
Investors are trying to mitigate risks by investing with companies that align with their values, as well as generating financial value, claimed BNP Paribas in the survey.
External stakeholder requirement as an ESG driver also saw an increase in this year’s survey, increasing from 32% to 46%.
“The industry has come some way since our first ESG survey in 2017. Asset owners and managers are now more likely to embed ESG within their organisation and strategic decision-making,” said Florence Fontan, head of company engagement, BNP Paribas Securities Services.
“They’re also increasingly embracing thematic investing. This should stand the industry in good stead to accelerate asset allocation to ESG strategies, an urgent necessity as warnings on climate change grow starker.”
In terms of challenges, the survey found that data remains the primary barrier to ESG integration.
Of the respondents surveyed in 2021, 59% cite issues related to data as a top impediment to integration. This figure was, however, a decrease from 66% in 2019.
Lastly, the social pillar of ESG remains the most difficult to analyse and integrate, with 51% of respondents rating social factors as the most challenging partly due to a lack of the right data.
Data is more difficult to come by and there is an acute lack of standardisation around social metrics, noted BNP Paribas in the survey.