Pension Funds See Benefits of ESG Strategies, But Have Concerns: Survey

There is growing interest among institutional investors in ESG strategies, and it will continue to grow in the coming years.

But institutions still have concerns, according to a recent report from Natixis Global Asset Management.

The report surveyed 660 institutional investors in 29 countries.

Here’s more on ESG, from the report:

Many are also beginning to see that ESG may also provide direct investment benefits. Half (50%) of those surveyed say these strategies could also be a source of potential alpha, but there is much more to be learned as only 26% have found that incorporating ESG into investment decision-making has had a positive impact on investment performance.

Managers identify some of the key challenges to seeing more broad-based adoption of ESG: the difficulty in measuring performance (52%) and a lack of transparency in reporting (38%). With a growing number of managers offering specialist capabilities within this realm, these concerns will likely dissipate.

These specialists are looking at ESG through a new lens, investing in key trends such as green energy, in which businesses will benefit from increased societal focus on sustainability. This kind of impact investing may be the opening for more managers to incorporate ESG into institutional strategy. It may be one critical reason why more than four in ten (44%) of those surveyed say ESG will be a standard practice for most managers within five years.

The report, which is full of insights ESG-related and otherwise, can be accessed here.