A whopping 88% of US companies sponsoring workplace pension schemes have not integrated environmental, social and governance metrics into their investment strategies.
That’s the headline finding from North American investment consultancy NEPC, in its Future of ESG Investing report, released on Monday. The report was conducted with 69 corporate sponsors of 119 workplace pension schemes.
The report found that “a handful of plans” had incorporated sustainability metrics into their manager selection process but nearly a third of respondents (32%) said they could not commit to an ESG-based approach because they had insufficient evidence on how the approach translated to performance.
In the report, Brad Smith, a partner at the investment consultancy and Kelly Regan, a senior consultant at NEPC, noted that the future adoption of ESG investment approaches were conditional on investors seeing “clear and concise research on ESG’s impact to performance”.
They added that further education on the benefits of ESG approaches would also improve take up of the approach and that more than a third of those polled said they are interested in ESG.
The report concluded: “Millennials are emerging as a generation that expresses interest in ESG and they are fast becoming decision-makers and retirement plan participants. Investment managers are including ESG as a complement to the traditional financial evaluation of assets.”
Parts of the North American investment market continue to lag Europe in the adoption of ESG approaches.
In June, a separate survey by Cerulli Associates found that just 19% of US investors that are already embracing ESG metrics thought that sustainable investment returns were the key driver to adopting the approach.
The same survey reported that more than a third of US investment advisers believe it is necessary to sacrifice returns in order to include ESG metrics in a portfolio.