Companies’ ESG Performance of Growing Importance to Investors

Aviva Investors published a survey of global equity and fixed income managers with combined assets under management of circa US$ 6 trillion. The survey shows that 84% consider Environmental, Social and Governance (ESG) factors as part of their investment process and actively vote on holdings. 79% of the managers polled believe ESG factors will be incorporated into all mainstream funds in the future, and 72% believe there is a link between a company’s ESG performance and total returns for investors.

Ian Aylward, Co-Head of Multi-Manager at Aviva Investors, said:

“Aviva Investors’ multi-manager team integrates environmental, social and governance considerations into its fund selection process. We are increasingly seeing these issues crossing over into ‘mainstream’ fund management, with ESG performance starting to be assessed in actively managed funds. We wanted to know just how far the global investment community has come in doing this.”

Clearly, quite far. These numbers would certainly have been a lot lower only a few years back, and probably closer to zero a decade ago. In fact, Mercer published a study for the IFC in 2009 titled “Gaining Ground – Sustainable Investment Rising in Emerging Markets”. At this point a survey of 177 fund managers with investments in emerging markets showed that ESG issues were taken into account in roughly 50% of the emerging market equities products offered by the managers. It stands to reason that this percentage, in particular for investments in emerging markets would be significantly higher today.