ESG integration remains a key factor in asset allocation decision making as climate change threatens both physical disasters such as extreme weather, and potential corporate losses from decarbonisation as fossil-fuel-intensive assets are scrapped. Respondents revealed ESG is evolving from broad-based integration to dedicated sustainable and impact strategies with ESG now an integral part of the investment process and portfolio construction for nearly half (47 per cent) of responding asset owners.
“Asset owners are demanding more dedicated ESG strategies, focused on sustainability and impactinvesting, moving beyond just factoring ESG into their manager due diligence and investmentprocesses. This is a trend that we expect to continue, as asset owners face greater pressures fromexternal stakeholders,” - Says Diane Cullen, a senior consultant at Casey Quirk based in Boston.
ESG is an integral part of the investment process for nearly half of asset owners
ESG as Factor in Investment Approach
% of respondents
While non-adopters remain, those investing in esg are seeking more dedicated strategies
% of portfolio deployed in ESG
Median, controlled for allocation of total portfolio, 2022 vs 2025E
Only 13 per cent of survey respondents said ESG doesn’t play any role in their portfolio construction. Moreover, questions asking asset owners to reveal their ESG integration plans over the next three years indicate greater integration into sustainably labelled products and impact strategies ahead. In a notable trend reflective of the data challenge inherent in ESG investment, 34 per cent of respondents said they took ESG into consideration but do not make investment decisions based on ESG ratings.