A new survey by Natixis Investment Managers shows that 75% of professional investors are now implementing ESG strategies.
Natixis found that 77% of professional fund selectors and 75% of institutional investors now consider ESG factors an integral part of sound investing. Five years from now, nearly six in 10 (59%) financial advisors expect ESG investing to be standard practice across the industry.
Though a lack of consensus on ESG measurement has been a challenge for investors, 83% of fund selectors and 79% of institutional investors say it’s gotten easier to benchmark performance. More than half of professional investors surveyed by Natixis, including 53% of institutional investors and 55% of fund selectors, now agree that companies with better ESG track records generate better investment returns.
Seven in 10 fund selectors and 62% of institutional investors think alpha can be found by incorporating ESG factors into investment analysis. More than six in 10 (63%) advisors also agree that ESG strategies may offer potential to outperform the markets.
When it comes to evaluating a company or industry, nearly half (48%) of professional fund selectors consider nonfinancial ESG factors to be as important as fundamental financial factors. Yet 67% of fund selectors and 74% of institutional investors say it is still hard to know which nonfinancial measures are material to investment analysis.
“The rapid global adoption of ESG has raised questions about whether the momentum building around ESG will continue or if it’s building toward a bubble,” said Harald Walkate, Head of ESG for Natixis Investment Managers. “The answer lies in greater clarity about what investors ultimately want to achieve, not only to deploy ESG strategies that align with their values but also to set realistic expectations for both financial results and societal impact.”