Sustainable investing is a low priority issue for most institutional investors, according to a survey by Schroders.
The UK-listed asset manager polled 650 investors around the world running $24trn (€20.6trn) and found that, although they expected sustainable investing to become a bigger issue in the next few years, it was not currently a high priority for most.
Almost a third (32%) of those questioned by Schroders said that how sustainable an investment was had “little to no influence” on the decision to buy.
Factors such as a manager’s track record, expected return and risk tolerance were all more important factors, investors said.
Roughly three quarters (74%) of respondents said sustainable investment would become more important in the next five years. Last year 67% of investors agreed with this. Almost half of investors have increased their allocations to related investments in the past five years.
However, larger investors tended to place more emphasis on long-term sustainability issues, Schroders reported, with 32% of those with a holding period of at least five years stating that sustainability was “a significant influence”. For investors with a 3-5 year horizon, less than a quarter (23%) prioritised sustainability.
The asset manager also found that those placing a higher importance on sustainability were more confident about achieving there target returns: more than half (59%) were “at least reasonably confident” of hitting their targets.
Jessica Ground, global head of stewardship at Schroders, said: “There remains a gulf between institutional investors’ sustainable investment aspirations and the reality of how they prioritise these factors in their investment decision-making. Investors clearly recognise that investing sustainably is going to be more and more important going forward, but this approach is yet to sit at the heart of their investment process.”
Consultancy rolls out new ESG process
Investment consultant group Willis Towers Watson has teamed up with index provider MSCI to develop a new environmental, social and corporate governance (ESG) strategy for its client base.
The Adaptive Capped ESG Universal index was designed to incorporate “a broad range of ESG factors” for use by equity investors, Willis Towers Watson said. Clients have already invested more than £500m (€556.1m) in the strategy.
The index has exposure to developed and emerging markets and places more emphasis on companies with “strong and improving” ESG scores, as calculated by MSCI’s own metrics. Only a small number of companies would be excluded, the consultancy said, meaning investors could still engage proactively with companies.
Nikko broadens green bonds strategy
Nikko Asset Management has added assets issued by sovereigns, supranational groups and agencies to its green bond fund’s investment universe.
It has expanded the mandate of its Global Green Bond fund to include more “predominantly AAA-rated” bonds, mostly focused on raising money for climate change mitigation.
Andre Severino, global head of fixed income at Nikko AM, said the green bond market was experiencing “record growth”, with Moody’s estimating issuance to hit $175bn to $200bn this year.
Nordic bank SEB estimated that $185bn worth of green bonds would come to market by the end of 2018.
“The expanded investment universe provides clients greater access to the growing green bond market,” Nikko said, “in addition to providing capital to a wider array of green projects worldwide.”