Less than a third of investment community members have either attended an ESG-focused conference or participated in an ESG-focused conference call in the past 12 months. This is true in every region, although 28 percent of North American investors have participated in an ESG-focused conference call, notably more than in Europe or Asia. Sell-side analysts are the least likely to participate in these activities: 89 percent neither attended an ESG conference nor participated in an ESG conference call in the past year. The buy side is more likely to engage in ESG, with 29 percent of buy-side analysts having participated in an ESG-focused conference call and 28 percent of fund managers having attended an ESG-focused conference in the past year. The majority of the global investment community would rather see ESG reported as part of an integrated report, although this preference is primarily on the buy side. Most North American investors would rather see a separate ESG/sustainability report. Overall, less than a quarter of investors frequently take account of ESG ratings in their investment decisions, while 22 percent say they rarely take them into account and 18 percent say they never do. North American investors are the most divergent in their ESG considerations, with the highest number saying they mostly or often take ratings into account, while at the same time having the highest number that rarely or never consider ESG ratings in their investment decisions. Again, it is the sell side that has the least interest in ESG: just 9 percent of respondents say they frequently take ESG ratings into account, while almost two thirds rarely or never do. In contrast, more fund managers (31 percent) mostly or often consider ESG ratings in their investment decisions than rarely or never do (30 percent).
Have you participated in an ESG-focused conference or conference call over the last 12 months?
How often do you take account of ESG ratings in your investment decisions?
Do you like to see ESG reported separately or as part of an integrated report?
Governance is the issue of most concern to investors, with 38 percent of the investment community polled asking questions on governance at least monthly. Only 12 percent ask questions regarding social policy issues with the same frequency and a majority rarely ask social policy questions over the course of the year. Not only do Asia-based investors ask governance questions more frequently than North American or European investors, but they also more regularly ask questions about social policy issues. Seven in 10 North American investors asked social policy questions to companies fewer than three times in the past year. Fund managers show more regular interest in all aspects of ESG than buy-side or sell-side analysts. Almost half ask governance questions to companies on at least a monthly basis. Just 7 percent of sell-side analysts have asked questions on social policy with the same frequency, with nearly two thirds asking social policy questions just once or twice a year.
How often have you discussed the following with companies over the past 12 months?
When rating how important ESG is in their investment decisions, investors generally have a below-neutral view. Asked to score on a scale of 0 to 10, with 0 meaning ‘not at all important’ and 10 being ‘extremely important’, the global investment community gives an average score of 4.6. One fifth give a neutral score of five, while 37 percent give a score higher than this and 43 percent a score lower. North American investors attach less importance to ESG: more than a quarter of North American respondents give a rating of either 0 or 1, with 49 percent scoring below neutral. European investors gave a rating of eight or higher 22 percent of the time. As has been shown throughout this survey, the sell side attaches less value to ESG than the buy side. Here it gives an average score of just 3.4, notably lower than the 4.5 given by buy-side analysts and the 4.8 given by fund managers. Just 23 percent of sell-side analysts give a positive score of six or more to the importance of ESG in their investment analysis. Fund managers are much more inclined to attach importance to ESG in their decisions, with 42 percent giving a rating of six or above.
Overall, on a scale of 0 to 10, how important is ESG in your investment decisions/analysis?
Overall, how important is ESG in your investment decisions/analysis?
Although investors give the importance of ESG in their decision-making a relatively low average rating, this does not give the complete picture of how they view the subject. Their attitudes to ESG are often more nuanced than their scores suggest. When asked to comment on the reasons behind their rating, even respondents who give a below-neutral score of four or less often show an understanding of the increasing relevance of ESG to the investment landscape. Below is a selection of the comments we received from investors about their rating of ESG importance.
