In second annual survey of institutional investors and consultants, differences on key responsible investing issues remain
Survey reveals a marked contrast in perceived value of ESG between US and European investors
Press Release – MINNEAPOLIS, November 1, 2017 — Two-thirds of institutional investors use environmental, social and governance (ESG) considerations as part of their investment approach, and 25% expect to increase their allocation to managers with ESG-based investment strategies within one year, according to a global survey by RBC Global Asset Management (RBC GAM). While these results suggest that responsible investing has moved into the mainstream, the survey also reveals how investors’ perceptions differ starkly by region; when it comes to ESG investing, investors in the United States are far less accepting than their European counterparts.
RBC GAM’s survey reveals sharp differences among institutional investors as to whether ESG analysis can mitigate risk and drive alpha in a portfolio. Some institutions plan to increase their exposure to ESG strategies in the near term while others are holding back, unconvinced of its value and unimpressed with available data about corporate performance on ESG. The survey also uncovered broad disagreement over the proper role of shareholders, industry groups and regulators when it comes to improving corporate reporting and driving change on issues such as gender diversity among directors.
“Globally, we are seeing a clear trend toward greater awareness, interest and adoption of ESG analysis and responsible investing,” said Judy Cotte, vice president and head of Corporate Governance and Responsible Investment at RBC Global Asset Management. “This survey reveals that many institutional investors are actively discussing these issues within their organizations and with consultants and stakeholders. And while some institutions are moving at a cautious pace, others are moving rapidly to adopt an ESG-based investment approach.”
Responsible Investing: The Evolution of Ownership is the second annual survey of institutional attitudes and perceptions of responsible investing conducted by RBC GAM. This year, RBC GAM queried 434 institutional asset owners and investment consultants in the United States, Europe and Canada. The key findings from the global survey include:
“ESG investing has gone from being a tangential topic for investors, to an increasingly important consideration in the investment decision making process,” said Habib Subjally, Senior Portfolio Manager and Head of Global Equities, RBC Global Asset Management UK Ltd. “There is a growing level of interest among investors to gain a better understanding on the implications of ESG integration. We believe that ESG should not be perceived as the latest investment trend and that when applied in a thoughtful way, considering these factors will enable investors to approach decisions with a broader, more complete set of information.”
More US Investors Remain Unconvinced
Adoption of ESG investing is increasing in the US, and fully 25% of survey respondents plan to increase their allocation to ESG investment strategies within the next year. However, US adoption is far behind Europe, where that figure is 49%.
Even where US institutions are adopting ESG strategies, they appear to be doing so more cautiously than their European counterparts.
When asked to what extent ESG principles are used as part of their investment approach, only 12% of US respondents said “significantly used” versus 45% in Europe, while 37% in the US said “somewhat used.” What do significantly and somewhat mean? In the US, 50% of respondents who use ESG factor it in less than 20% of their portfolios; 43% of Europeans factor it in more than 80% of their portfolios.
Other data points suggest why this gap exists. Across nearly every question posed by the survey, asset owners in the US appear more skeptical of the value of ESG than their counterparts in other regions:
About the Survey
The data for RBC GAM’s report, Responsible Investing: The Evolution of Ownership, was gathered via a survey conducted in July and August 2017. The survey collected the opinions of 434 institutional asset owners and investment consultants in Canada, the U.S. and Europe. For a full copy of the survey results and analysis visit RBC GAM’s Corporate Governance and Responsible Investing website .
About RBC Global Asset Management
RBC Global Asset Management (RBC GAM) is the asset management division of Royal Bank of Canada (RBC) and includes institutional money managers BlueBay Asset Management and Phillips, Hager & North Investment Management. RBC GAM is a provider of global investment management services and solutions to institutional, high-net-worth and individual investors through separate accounts, pooled funds, mutual funds, hedge funds, exchange-traded funds and specialty investment strategies. The RBC GAM group of companies manages approximately $400 billion in assets and has approximately 1,400 employees located across Canada, the United States, Europe and Asia.
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