Global investment professional association CFA Institute announced the release of results of a survey of its members on ESG issues, exploring the views of investment managers and financial industry participants on matters ranging from the integration of ESG factors into the investment process to the need for global sustainability reporting standards. Some of the key findings of the survey include strong support for product disclosure rules for ESG investment solutions, and for mandatory reporting by companies on sustainability matters.
The report included responses from over 700 CFA Institute members and CFA charterholders, across the Americas, Europe and Middle East and Asia Pacific regions.
One of the focus areas of the survey was the examination of respondents’ views into the responsibilities of investment managers regarding the integration of ESG factors into the investment process. The survey found that a large majority felt that ESG matters should be included in the process of analyzing and selecting investments, though almost half responded that ESG factors should be integrated only as deemed financially material to the investment. Only 18% responded that ESG integration is not necessary. There was very little support for mandatory requirements by regulators to integrate ESG, with 31% responding that ESG integration should be decided by the client in consultation with the investment manager, and 47% saying that it should not be mandated by government regulations.
Margaret Franklin, CFA, President and CEO, CFA Institute, said:
“Uncovering investor viewpoints is critical at a time when global regulatory policy is in a state of flux concerning the role ESG factors play in the practice of investment management. Policymaker debates and regulatory changes are well underway on a variety of climate change and ESG topics around the world. Our members suggest these debates would be better settled between investors and their investment managers rather than regulators.”
As greenwashing concerns increase, the survey found support for rules to guide the communication of ESG investing claims for investment products and managers. 62% of respondents agreed that the industry would benefit from a global investment product disclosure standard to help understand how an investment manager uses ESG integration in the investment decision making process.
The survey also indicated that investment managers back the concept of mandatory ESG disclosure for companies. Nearly three quarters of respondents said that sustainability reporting should be made mandatory, or that there should be some mandatory disclosures via regulatory standards. Only 7% responded that sustainability reporting is not needed. Respondents also prefer a reporting approach that includes disclosures on ESG risks facing a company, as well as on the social and environmental impact of the company’s products and operations, with 68% saying that reporting standards should require this “double materiality” approach.
Investment managers were also clearly in favor of the development of consistent and comparable ESG disclosures, with 78% of respondents preferring sustainability reporting based either on a single global approach, or on a consistent global baseline allowing for regional or market-based adaptations. Investors also expressed a need for third party assurance of ESG data from companies, with 64% responding that some level of auditor assurance should be required for sustainability reporting, and only 16% saying that no assurance is necessary.
Matt Orsagh, CFA, CIPM, Director of Capital Markets Policy at CFA Institute, said:
“The findings from our survey shed light on the views of investors regarding key debates in the current maelstrom of ESG policy actions and will clearly help inform the global debate as regulatory initiatives evolve.”
Click here to view the CFA Institute survey results.