Traditional objections to ESG (environmental, social and governance) investing, such as low returns or a lack of investment options, are fading, says State Street. But it states that one significant barrier remains: the lack of transparent, standardized and quality data.
State Street Global Advisors surveyed 582 institutional investors who either currently—or plan to—implement ESG investing, as well as 750 individual investors for the study entitled, The Investing Enlightenment: How Principle and Pragmatism Can Create Sustainable Value through ESG.
Nearly all (92 percent) institutional investors surveyed want companies to explicitly identify ESG factors that materially affect performance, while 60 percent note a lack of industry standards for measuring ESG performance as a significant barrier to full integration.
Forty-six percent of retail investors want to see more companies reporting ESG performance related data and 46 percent say they need more ESG data from other sources to make educated decisions, State Street says.
Other barriers to ESG investing are fading, State Street says. Only 35 percent of institutional investors believe ESG investments mean accepting lower returns.