Two thirds of fund buyers around the world have said they believe all investment funds will incorporate ESG in five years, with half also saying sustainable investments can help deliver superior performance, as reported by ESG Clarity in the UK.
A survey of 200 professional buyers around the world carried out by CoreData reinforced the view that sustainable investing had gathered momentum in the aftermath of Covid-19, and UK fund buyers are leading the charge.
While 63% (two thirds) of global fund buyers said all investment funds will incorporate ESG in five years, the proportion increased in the UK to three quarters (73%).
Furthermore, the survey, which was carried out in November and December 2020, found six in 10 (60%) global professional fund investors have increased their focus on ESG in the wake of pandemic, with the proportion increasing to eight in 10 (81%) in the UK.
Fund buyers also said sustainable investments can help deliver superior performance with 50% saying they tend to outperform non-ESG counterparts. CoreData said this sentiment was most pronounced in the UK, with 65% respondents agreeing, and Europe, where 60% agreed.
There is also an opportunity for active managers to capitalise on the momentum behind sustainable investing, the survey found, with three quarters of global fund buyers saying this increased demand for ESG will benefit active funds. This figure rises to 92% for UK respondents.
Andrew Inwood, founder and principal of CoreData, commented on the findings: “The pandemic has helped reset humanity’s moral compass and encouraged people to favour investments aligned with their beliefs and values. Furthermore, there is a growing body of evidence indicating that ESG can help enhance performance and improve risk management. All of which means the ESG story has a long way to run.”
Despite the excitement in the UK and Europe, fund buyers in North America appear to remain sceptical with only half of fund selectors indicating they believe all investment funds will incorporate ESG in five years, and less than half (42%) have upped their focus on ESG in light of the pandemic.
Furthermore, respondents in Asia are the most concerned about greenwashing. Overall, eight in 10 global respondents (80%) said greenwashing will become more prevalent as demand for ESG increases with this figure falling to 77% in the UK but rising to 88% in Asia.
Fund buyers in Asia were also the most concerned about a bubble in ESG investing with half of those surveyed saying this is a concern, compared to just 12% of UK respondents.