Investment decisions support tools and services company MSCI announced the release of its 2021 Global Institutional Investor Survey, with findings including an acceleration in ESG investing by institutional investors, particularly in the U.S.
For the study, MSCI surveyed 200 asset owner institutions, including sovereign wealth funds, insurers, endowments/foundations, and pension funds, with assets totaling approximately $18 trillion. According to MSCI, the survey revealed that the COVID-19 pandemic drove an increased focus on sustainable investing, with 77% of investors reporting increasing ESG investments “significantly” or “moderately.” The past year appears to have had a particular influence on U.S. investors who have historically lagged their global counterparts, with 78% saying they would increase ESG investment either significantly or moderately as a response to COVID-19.
Baer Pettit, President and Chief Operating Officer, MSCI, said:
“The combination of climate-related events, such as devastating wildfires, floods and droughts, and a global pandemic have accelerated the paradigm shift on ESG and climate change. Once an issue for ‘green funds’ and side-pockets, ESG and Climate are now firmly established as high priority issues. 2020 marked a profound shift in the way institutions invest as many investors have recognized that many companies with strong environmental, social and governance practices outperformed during the pandemic.”
Other findings from the survey include:
- Increasing emphasis on “S.” 48% of US investors, and 50% in the UK reported placing a greater emphasis on the “Social” factor in ESG.
- Climate risk cited as most significant influence on investments. Climate risk was cited by 31% of institutional investors with more than $200 billion of assets as the factor with the greatest impact on the way the organization invests over the next three to five years, followed by disruptive technologies (19%), and sophistication of ESG measurement (14%).
- Large investors taking the lead on integrating climate data. 50% of investors with more than $200 billion of assets said they are regularly using climate data to manage risk, compared with just 16% of those with less than $25 billion.
- Diversity. While 63% of respondents report at least some pressure to improve internal diversity, only 11% say the industry has become more diverse, and 86% feel more needs to be done.