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ESG roundup: ESG demand, The 30% Club, UK Carbon Budget

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Nearly half of institutional investors, 48%, say their appetite for environmental, social and governance (ESG) or socially responsible investment (SRI) strategies has increased over the past six months, according to research by ING Investment Management International (ING IM).

Three-quarters of surveyed investors believe being environmentally and socially responsible – as well as encouraging good global governance  – is important to the future of investment.

The findings also show that two-thirds of investment professionals responsible for pension funds already integrate ESG or SRI into their investment processes.

Of those surveyed, a greater reliance on responsible investment criteria was expected to bear fruit in terms of investment return over the next five years.

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However, when it came to the reasons for incorporating this into their investment strategy, the majority, 58%, of respondents did so due to a sense of personal responsibility.

In addition, just over half (52%) stated that it was the companies’ procedure to apply such criteria to investments.

In terms of the most proactive practitioners of these principles, developed economies were perceived to be the most keen, with Western Europe cited by 86% of respondents, followed by North America with 36% and Australasia with 24%.

With regard to asset owners, pension funds were viewed as the most willing group to incorporate ESG factors within their portfolios – cited by 73% of respondents – ahead of charities with 62%.

The research was conducted among 85 pension fund managers and advisers in September.

In other news, an interim report by The 30% Club’s ‘Balancing the Pyramid’ Group, business psychology consultancy YSC and professional services firm KPMG revealed that a man starting his career with a large FTSE 100 UK company is 4.5 times more likely to make it to the executive committee than his female counterpart, despite a now average 21% female representation at the surveyed organisations’ executive committee level and 25% of organisations achieving 30% female representation.

The study – undertaken across a section of FTSE 100 and FTSE 250 companies, totalling more than 450,000 employees, both male and female – has debunked some of the myths about how women progress to the very top and aims to give practical and constructive advice to companies on how to update their gender intelligence.

It found that, overall, men and women are equally ambitious. 

However, because women tend not to show the same level of ambition early, this exponentially lifts by the time they reach executive levels, according to the study, and companies need to consistently reassess career options for women, particularly when male peers are more overt about aspiring over a longer range.

Helena Morrissey, chief executive at Newton Investment Management and founder of The 30% Club, said: “Men and women are different – equally intelligent, but we behave differently and are motivated by different things.

”This new research gives more depth to the intuitive argument that balanced teams perform better and gives companies specific actionable ideas to improve their management of all talent – regardless of gender.”

The study found that quality of line-management proved a bigger boost to women’s commitment than formal development programmes, sponsoring, mentoring or executive coaching.

The full analysis and report will finish early next year.

Meanwhile, European investors have responded to the publication of the Committee on Climate Change’s updated recommendations on the UK’s Fourth Carbon Budget by urging the government to stick to its current emissions reduction objectives to deliver the billions in energy investment the country needs.

Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change (IIGCC) – which represents more than 85 of Europe’s largest investors, worth a combined €7.5trn – said: “The UK desperately needs investment in its energy infrastructure to secure its future power supply. Independent estimates have put this investment need at £330bn (€392bn) by 2030.

”This investment will only happen if investors are confident in the UK government’s commitment to a low-carbon energy future. Changing course on emissions reduction objectives now would undermine this confidence and damage investment prospects.

“By putting in place ambitious policies, the UK can be a leader in the development of a low-carbon economy that creates jobs and boosts growth. The government can reassure investors and signal its commitment to a low-carbon future by sticking to the emissions-reduction objectives outlined in the fourth carbon budget.”

 

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