Nearly nine out of 10, or 88%, of investment consultants who participated in a recent survey believe that client interest in environmental, social and governance (ESG) issues will continue to grow over the next three years.
The survey, conducted by the Social Investment Forum and Pensions & Investments magazine, polled 41 respondents from 40 firms that ranged in size from $1 trillion to $100 million in assets under advisement.
The survey asked recipients whether they advise clients on any of six ESG integration approaches: proxy voting; corporate engagement; exclusion of stock/bonds in a portfolio; integration of ESG analysis into investment decision making; inclusion of stock/bonds in a portfolio (best-in-class); and positive selection according to sustainable themes, such as climate change.
Respondents gave the worst marks to excluding stocks and bonds from a portfolio based on ESG factors-with 41% saying it has a negative impact on portfolio performance. A majority thought the other five strategies do not harm portfolio performance, and a plurality-ranging from 38% to 49%-said those strategies have a positive impact. For each of the six strategies, a quarter to a third of all respondents said they did not know whether the strategy had a positive, negative or no impact.
A majority of advisors, 71%, reported that they only discuss ESG integration when clients ask about it.
The 2009 survey was adapted from a similar poll carried out by Eurosif, a pan-European membership association dedicated to addressing sustainability through financial markets.The U.S. survey was sponsored by four SIF members: Bloomberg, Calvert Investments, Sentinel Investments and TIAA-CREF. Pensions & Investments sent the questionnaire by e-mail to investment consultants in its database.
To see the full survey report, click here.