Survey shows climate is top ESG concern

A Research Affiliates survey of financial advisors and wealth managers shows that climate change ranks top as the most important ESG theme by respondents.

The ESG survey of 131 financial advisors and wealth managers from 13 countries cover firms with over US$100 million in AUM, with 31% having AUM of US $100–500 million and 40% having AUM of over US$500 million.

The key findings include:

• The primary driver of advisors’ decisions to employ ESG investment strategies is client demand, as cited by 63% of respondents.

• By far, the most commonly used investment vehicles to gain ESG exposure are managed funds and ETFs, and the preferred asset classes are global and US stocks and bonds.

• Climate change was ranked as the most important ESG theme by respondents.

• Gender diversity was the lowest ranked theme of the six themes respondents ranked.

• CO2 emissions is the environmental issue of most concern to clients. The most popular approach to address carbon impact is to reduce allocations to fossil fuel companies and the largest emitting companies.

• Over the next three years, only 16% of advisors expect to have zero ESG exposure in their clients’ portfolios compared to 33% having zero exposure today.

• Most respondents do not have a written policy on ESG (76%) or on diversity and inclusion (69%), choosing to communicate their firm’s values to clients in person.

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