More than half see no ‘clear value proposition’, finds Callan Associates survey
Just one in five institutional investors in the US uses ESG principles in investment strategies, according to a survey by investment research firm Callan Associates.
The survey also shows that 53 percent of funds do not see a ‘clear value proposition’ in incorporating ESG principles into investment decisions while almost half of those surveyed say they won’t take into account any factors that are not purely financial.
But Callan Associates says the survey, which was conducted among 129 participants across the US in September, shows that larger funds are much more likely to adopt ESG principles. The firm adds that adoption of ESG principles is likely to grow in the US in coming years.
‘The ESG strategies that have emerged in the past five years or so look to maximize returns by identifying sources of long-term, sustainable earnings,’ Callan Associates notes in an announcement about the survey results. ‘In part due to legislative changes, ESG approaches have gained significant traction in Europe and other parts of the world. Adoption is off to a slower start in the US, but data suggests a growing percentage of US investors and assets flowing into ESG.’
Callan Associates says the likelihood of using ESG strategies in investment decisions grows with the size of the investor: funds with more than $10 bn in assets under management are more than twice as likely as smaller funds to incorporate ESG principles.
The study authors say investors in central US states lead the increase in adoption of ESG principles, with an adoption rate of 36 percent. They are followed by investors in the Northeast, where 23 percent have adopted them, and the Southeast, at 21 percent. Investors in the US Mountain Zone are the least likely to adopt ESG guidelines, at 16 percent.
