BlackRock Survey: Investors Plan on Doubling Sustainable Investing Allocations in Next 5 Years
BlackRock, the world’s largest asset manager, released results from its Global Client Sustainable Investing Survey, indicating growing global demand for sustainable investing, and indications that investors expect to continue increasing ESG allocations for years to come.
The BlackRock survey covered 425 investors in 27 countries, representing nearly US$25 trillion in assets under management (AUM). Respondents included representatives from corporate and public pension plans, asset managers, endowments, foundations, and global wealth managers.
According to BlackRock, the survey reveals that the COVID-19 crisis has not slowed investor demand for sustainable investing, with 20% even reporting the pandemic would result in accelerated sustainable investment allocations. By region, growth in sustainable assets is most pronounced in Europe, while also increasing in the Americas and Asia-Pacific.
Mark McCombe, Chief Client Officer at BlackRock, said:
“The tectonic shift we identified earlier this year has really taken hold, as the convergence of political and regulatory pressures, technological advancements and client preferences have pushed sustainability into the mainstream of investing. The results of our survey show this sustainable transition is occurring all around the world.”
The survey found very strong investor interest globally in integrating environmental, social and governance factors in the investment process. 75% of respondents reported that they either use or would consider using an integrated approach, to account for ESG risks in their portfolios, looking at ESG criteria across all holdings and informing future investment decisions through a holistic sustainability lens.
In terms of long-term outlook, the survey suggests that the shift into sustainable assets is only beginning, with survey respondents planning to double their allocations to ESG assets under management (AUM) by 2025.
Other key findings of the BlackRock survey include:
- Regional ESG drivers: Mitigating investment risk is a key driver for adopting sustainable investment strategies in the Americas at 49%, compared to only 37% in EMEA. Americas investors are also motivated by expectations of better risk-adjusted performance at 45%. For EMEA investors, the top driver, at 51% is because it is “the right thing to do.”
- Top sustainability concerns: Across all regions, climate-related risks are at the top of portfolio concerns, reported by 88% of respondents globally. Looking forward, 58% of investors expect concerns over social issues such as diversity and inclusion, and fair labor practices to rise the most in the next 3-5 years.
- Obstacles to ESG investing: ‘Poor quality or availability of ESG data and analytics’ tops the list of greatest barriers to the adoption of sustainable investing practices, reported by 53% of investors.
“As we saw in this year’s survey, investors around the world are demanding continued focus from the industry on sustainability initiatives that will help them build better risk-adjusted portfolios for the future.”