ESG appears to be passing the scrutiny test with more investors perceiving performance merits.
This is with the exception of investors in the US, where scepticism has grown, according to a survey.
The 2020 RBC Global Asset Management ‘Responsible investment survey’ showed that, compared to 2019, there is an increase in the percentage of institutional investors who believe ESG-integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios.
In Europe this was up to 96% from 92% and Asia to 93% from 78%.
Respondents in the US are more sceptical. Only 74% were positive for performance, down from 78% in 2019. Over a quarter of US respondents (up from 22% in 2019) believe ESG integrated portfolios perform worse.
Similar scepticism from the US was expressed about the ability of ESG integrated portfolios to generate long-term sustainable alpha and to mitigate risk.
The ongoing Covid-19 pandemic is beginning to influence investors’ views about ESG, the report says.
Over 28% said Covid-19 has made them place more importance on ESG considerations and just over half of investors are looking for companies to disclose more details about worker safety, employee health benefits, workplace culture and other social factors due to the pandemic.
“As we analyse the trends in our year-over-year survey data, we’ve found that a growing majority of institutional investors are convinced of the merits of ESG adoption in their investment approach,” said Melanie Adams, head of corporate governance and responsible investment at RBC GAM.
The survey also shows support for diversity and inclusion targets for corporate boards remains strong, the firm said. More respondents favoured board minority diversity targets (44%) than opposed them (28%). Similarly, more respondents favoured board gender diversity targets (49%) than opposed them (26%).
In total, 809 institutional investors responded from North America, Europe and Asia.