Institutions have increased engagement in sustainable and impact investing by over 80% over the past four years, according to a survey released today by global investment firm Cambridge Associates (CA).
A diverse, global group of 144 institutions and asset owners took part in the firm’s biannual Sustainable and Impact Investing Insights and Perspectives client survey, which revealed that nearly two-thirds (65%) of respondents reported engaging in sustainable and impact investing, a 4 percentage point (or 6%) increase since 2020 (61%) and a significant increase (+29 percentage points, or 81%) relative to 2018 survey results (36%).
It also showed that of those engaging in sustainable and impact investing, 76% cited employing impact investing as an investment strategy, a significant increase from 59% in 2020, and more than half (55%) of the institutions implementing sustainable and impact investing strategies have more than 5% of their long-term investment pool allocated to those strategies.
The survey also reealed that 88% of those institutions implementing sustainable and impact investing have increased their allocation to this area in the past five years, with approximately 90% of respondents planning to increase their allocation to sustainable and impact investing over the next five years.
Of the respondents not currently engaging in sustainable and impact investing, nearly half (45%) anticipate seeking exposure in the future, the research found.
“The continued expansion of sustainable and impact investing across markets reflects a growing recognition that these factors are material to investment decision-making and long-term portfolio outcomes,” said Liqian Ma, global head of sustainable and impact investing research at CA.
“Cambridge has worked with clients for over 15 years to build resilient portfolios that seek to integrate all material risks and opportunities in the investment process, while aligning each portfolio to meet every institution’s unique financial and impact objectives,” he added.
Annachiara Marcandalli, European head of sustainability and impact at Ca, said: “Our clients are adopting articulated net zero strategies. These include: decarbonisation, deep engagement with managers to align their portfolios with the energy transition as well as making significant investments in climate solutions.”
Impact investing rose significantly over the last two years, while ESG integration and shareholder engagement also increased. There was a shift away from negative screening as a commonly selected strategy. Climate change and resource efficiency is the most common thematic focus area, followed by diverse manager investing and social and environmental equity.
Redwheel launches sustainability framework
Redwheel has launched a new sustainability framework – Greenwheel – to power and help deliver sustainable investment solutions that meet growing demand from clients.
Greenwheel’s remit is to advise, support and provide independent challenge to Redwheel’s investment teams with research, sustainability strategy and client perspectives at each stage of the product life cycle for the firm’s enhanced integration, transition and sustainable funds.
Tord Stallvik, chief executive officer of Redwheel, said: “Our investment teams operate with a high degree of autonomy and as such, their approach to sustainability considerations will differ accordingly. Whilst ESG is already fully integrated across all teams, we wanted to provide further support and challenge as part of creating industry-leading sustainable solutions that meet the demands of our clients. Greenwheel helps us do this.”
Redwheel investment teams will commission research from Greenwheel throughout the product lifecycle to complement their own analysis and to inform engagement with investee companies, it said.
Before the launch of a new product, Greenwheel will also assist the team in shaping the proposition including advising on frameworks that will support the delivery of the fund’s objectives. This engagement, support and challenge will continue once products have been launched.
Stephanie Kelly, who joined Redwheel from Abrdn last year will become head of Greenwheel, leading a team of subject-matter specialists with experience from within and outside the asset management industry. This includes newly-appointed Jessica Wan to lead social research and Paul Drummond to lead climate and environment research. Anna Polise joined in 2022 as climate research analyst.
The new team will “help support the investment teams to not only shape and adapt investment propositions and processes, but also challenge assumptions and understanding when it comes to the complexities of climate science and also crucially, social issues which we think is a very important part of how both clients and investment managers are increasingly thinking about investing sustainably,” Kelly said.
The Greenwheel team will work alongside Chris Anker, Redwheel’s head of sustainability, who continues to lead development and operationalisation of firm-wide sustainability policies.