Increasing numbers of US investors are incorporating environmental, social and governance (ESG) factors into their investment processes, suggesting that sustainable investing approaches are finally becoming more popular in North America.
Investment consultancy Callan released the findings of its sixth annual ESG survey on Wednesday, which found that 43% of US investors now incorporate sustainable factors into their investment portfolio construction processes. This compares to just 22%, when the survey was first carried out in 2013.
The research found that the largest, most sophisticated, investors were incorporating ESG factors at their highest ever rate (72%). US foundations had the highest adoption rates, with nearly two thirds (64%) saying that they incorporated sustainable factors into their processes, while more than half of endowments (54%) also were currently doing so.
The figures were lower for public funds, however, with just 39% of these investors integrating an ESG-aware approach and just 20% of corporate funds.
“The research and data supporting ESG investment have matured considerably in the past five years in the US, and investors are now more informed about what ESG means and the implementation options available to them,” Anne West, co-manager of Callan’s Published Research Group said.
“The latest survey reinforces the notion that ESG is not a one-size-fits-all solution. Rather, investors are finding implementation approaches that match their funds’ goals. The shift in implementation strategies—from introducing language to identify ESG goals and beliefs, to working with investment managers to implement those concepts—suggests we’re moving into a new phase with ESG.”
In a similar trend to the UK, US defined benefit pension plans were far more likely to incorporate ESG factors than DC plans. The survey found that a third of DB plans were doing so, compared to just 9% of DC plans. The research was conducted with 89 investors across the United States.