investment strategies for the world's largest institutional investors
The results of the CIO Sentiment Survey broken down into investment impact and themes
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The past year saw rising momentum behind ESG, but also rising criticism from some quarters which is forcing funds with strong ESG platforms to match their commitments with results.
Effectively incorporating sustainability goals is cited as one of the top three major challenges impacting teams by 44 per cent of respondents. Other widely-cited challenges to teams are at least partially related to ESG implementation, including ‘lack of necessary systems/tools’ at 38 per cent, ‘external stakeholder pressures (i.e. media, plan participants, regulators, etc.)’ at 33 per cent and ‘aggressive/ambitious plan objectives’ at 31 per cent.
% of Portfolio Deployed in Capabilities with ESG, Sustainability or Impact Characteristics
% of respondents
Just under a third of respondents (27 per cent) report having no ESG integration at all in their portfolio, although this is projected to fall to one fifth (20 per cent) in three years’ time. Over this time period, the current 14 per cent of respondents going beyond incorporating ESG risks to set sustainability objectives into their strategy is projected to climb to 19 per cent. No respondents have any of their portfolio deployed in impact investments, but 6 per cent of respondents plan to have impact investments in three years.
Asset manager partners are increasingly expected to lift their game on ESG, with 71 per cent of respondents collaborating with investment managers to increase transparency and develop best practices with respect to ESG initiatives, 62 per cent requiring more consistent and transparent sustainability reporting, and 58 per cent adding mandatory ESG questions to their RFP process.
“Asset owners that are looking to further implement ESG, especially those looking for sustainable or impact strategies, they are finding that it’s been very difficult for them to successfully and effectively implement these strategies across the board,” Cullen said. “One of the reasons is lack of data, standardisation and the resources to help them with that. What we found this year is they are increasingly relying on asset management partners to help them.”
Organization’s Future Approach to ESG, With Respect to Asset Manager Partnerships
% of respondents
2023 CIO SENTIMENT SURVEY