Investment management firm Federated Hermes released results of its 2020 ESG Investing Survey. Findings from the survey indicate that investors are becoming more sophisticated in their approach to sustainable investing, and that the ‘Social’ aspect of ESG is gaining in prominence, as the COVID-19 pandemic continues.
The survey of U.S. investment professionals was conducted between June 1 and July 9, and included 50 institutional asset owners with more than $500 million in assets under management, 102 financial advisors and wealth managers with client assets under management (advisement) of more than $25 million, and 100 high-net-worth individuals and families with investable assets of more than $1 million.
One of the key findings of the survey is the evolving nature of ESG investing, with investors choosing more proactive integration of sustainability factors. Federated Hermes noted that investors are moving away from relying on negative screening strategies, with 64% of high-net-worth investors and 74% of institutions focusing on positive screening strategies instead. 64% of institutional investors report understanding the value of long-term engagement with portfolio investments, and nearly half said that active strategies are their primary way of finding ESG investments. Additionally, the Social aspect of ESG is coming increasingly into focus, with roughly two thirds of investors reporting that social factors have gained in importance in assessing the risk of investments.
According to Federated Hermes, the survey also revealed that fixed income may become the next focus area for ESG investors, with more than 20% of institutional investors reporting plans to add ESG-integrated high-yield fixed-income allocations in the next 12 months.
Mary Green, Client Portfolio Manager at Federated Hermes, said:
“As the pandemic endures, a majority of institutions, financial advisors and high-net-worth individuals are focusing on fundamental ESG risks and opportunities, which have evolved into the mainstream. Our survey showed the importance of responsible-investing credentials among investors, which is in line with Federated Hermes’ conviction that responsible investing is the best way to create wealth over the long term.”