October 4, 2019 / News

Responsible investment takes hold globally

By Joe McGrath, ESG Clarity

Just 36% of investors are yet to adopt sustainable or ESG-based investment allocation approaches

Responsible investment takes hold globally

More than half of investors around the world now have a responsible investment policy in place, or are in the process of implementing one, according to research by investment consultancy Aon.

The research paper entitled Global Perspectives on Responsible Investing 2019, found that 44% of investors have now put in place a responsible investment policy, with 24% saying they have one under development.

The survey was conducted among 229 investors, globally, including corporate pensions, family offices, high net worth individuals, endowments and foundations.

In total, just 36% of respondents said they had no responsible investment allocations whatsoever, down from 51% when this survey was carried out in 2018.

Of those investors still to implement a responsible investment policy, around 23% said they had not done so because of a lack of consensus on investment returns. Other barriers included a lack of agreement on terminology or materiality, or simply a lack of dedicated resources.

85% of those polled said they considered responsible investing to be at least “somewhat important”, up from 68% when the research was last carried out in 2018.

Those respondents considering responsible investment approaches to be “very important” grew by 10 percentage points from 25% in 2018 to 35% in 2019.

“Like many of our clients around the globe, Aon is witnessing a revolution in corporate responsibility and sustainability,” said Cary Grace, chief executive officer of Global Retirement and Investment.

“We confirmed that responsible investing is expanding at a furious pace. In response, at Aon we have undertaken a growing number of initiatives devoted to improving and expanding our commitment to, and action around sustainability.”

The full report is available here.

What is Responsible Investing?

For the purpose of the survey, Aon deemed responsible investing as follows:

Socially responsible investing

SRI investing involves the avoidance of or divestment from an investment or group of investments, usually based on an investor’s or organisation’s value system.

Impact investing

Positive screens — generally aligned with a desired social, economic, or environment outcome. Impact investing is also generally aligned with an individual’s or organisation’s values. Often referred to as doing good and doing well. The goal of impact investing is to generate returns while positively impacting a particular demographic group, business outcome, or environmental factor.

Mission related investing

Positive and negative screens using a combination of the responsible investment strategies. Examples may include faith-based investing or investing to extend a foundation’s grant-making capabilities.

ESG integration

ESG integrated investing is different from the rest of its RI peers, because unlike socially responsible investing, impact investing, and mission-related investing, which are driven primarily by individual or institutional values, ESG investment decisions continue to be directed by the fundamentals of the investment.