The Race to Harness ESG and Sustainability

Global investors report on ESG and sustainable investment practice.

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The Race to Harness ESG and Sustainability

Global investors report on ESG and sustainable investment practice.

June 10, 2021

Investment aligned to ESG and sustainable principles continues to soar. In a global survey conducted among 288 of BNY Mellon’s clients (representing asset managers, asset owners, alternative asset managers, banks, broker-dealers and insurance firms), we uncovered the ESG and sustainable investment practices market participants are adopting, and which ones they may remain committed into the future.

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Key Findings

 

  • A majority of respondents have adopted or will adopt more active methods of ESG implementation going forward. 75% of respondents said they would implement or continue to implement ESG integration over the next 3-5 years, compared to 46% who are integrating ESG today.
  • Passive approaches to investing sustainably, namely screening methods, seem likely to become a “minimum safeguard” in the future. 49% of surveyed participants said that they are likely to apply screening (negative, positive, norms-based) to some or all of their portfolios over the next 3-5 years. This figure remains flat when compared to the percentage rate of respondents implementing negative screening today.
  • Investors demonstrate a strong commitment to sustainable and impact investing, with 63% of respondents saying they will conduct or continue to conduct sustainability-themed or impact investing over the medium term.
  • Projected commitment to ESG integration over the next 3-5 years could signal more requirements for ESG disclosure within alternative asset classes. 75% of respondents said they are likely to implement, or continue implementing, ESG integration across one or multiple asset classes over this time frame, while 55% of respondents seek disclosures on ESG issues from the private investment entities/structures in which they invest.
  • Engagement is an important facet of the sustainable investment process. 69% of respondents actively engage with investee companies on sustainability issues.
  • The “lack of quality ESG-related data [available] to accurately inform investment decisions” is considered the greatest hindrance to ESG integration among survey participants. However, there is room for improvement and investors seek solutions to the problem. A small number of surveyed participants map investment information against taxonomies and ESG standards frameworks, while a greater number would consider using a solution to do so.
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