The quality and quantity of information on environmental, social and corporate governance (ESG) performance companies make available is unsatisfactory for most institutional asset owners, wealth managers and pension plan consultants, according to a new survey.
In its first responsible investing survey, RBC Global Asset Management also found that only 30% of respondents said they considered ESG investing to be a source of alpha.
This is in spite of an increasing amount of research concluding that various responsible investing factors lead to better financial returns, the asset manager said.
Ben Yeoh, senior portfolio manager at RBC GAM said: “It is striking to see asset owners remain doubtful of ESG’s efficacy even as so much capital pours into ESG-related investments.”
He said this showed many investors had yet to understand the financial benefits of ESG.
“That gap, between the empirical data and perception in the marketplace, represents an opportunity that can be exploited with thorough, fundamental analysis of environmental, social and governance considerations,” he said.
Only 17% of respondents said they were somewhat or completely satisfied with the quality and quantity of ESG-related data from companies in the survey based on responses from 90 individuals, mostly from the US, compared with 43% who indicated some level of dissatisfaction.
RBC GAM said this broad dissatisfaction was likely to lessen in the next few years because of progress being made by organisations such as Sustainalytics, MSCI and the Carbon Disclosure Project.
In the survey, 40% of respondents said they thought of ESG as a risk mitigator, against 33% who did not think of it this way.
However, 62% of respondents said they believed the fossil fuel free movement was a lasting investment issue rather than a fad.