Some 87% of institutional investors remain committed to their sustainability goals, despite a lower level of advocacy, a new report by BNP Paribas has found.
BNP Paribas’ fifth biennial ESG survey, Institutional Investors Leading the Way, surveyed 20 asset owners, asset managers and private capital firms across 29 countries, which represented a combined $33.8 trillion assets under management.
Pace of progress
As it found, 84% of investors believe the pace of progress of sustainability is either going to ‘continue’ or ‘accelerate’ between now and the end of the decade, while two fifths (41%) cite a ‘more reserved approach’ in communicating their process and achievements.
Some 85% of respondents said that they are integrating sustainability-related criteria into their investment decisions.
In terms of the top sustainability objectives for the next two years, investors cited increasing allocations to energy transition assets as their top priority (49%), followed by using active ownership to advance their own organisation’s ESG goals (47%).
The need to invest in low-carbon assets while divesting from carbon-intensive assets was cited as a priority by 46% of respondents.
‘Investors are increasingly allocating to specific themes or regions to help identify opportunities for impact and alpha, and focus their expertise into generating better outcomes,’ BNP Paribas noted.
Investment pacesetters
Based on the report’s key characteristic framework, around a fifth (19%) of investors are described as ‘pacesetters’, a ‘more advanced type of investor in sustainable investing’.
This cohort puts a much greater emphasis on portfolio decarbonisation (95%), social issues (94%), just transition (68%), and biodiversity (86%), BNP Paribas noted.
Elsewhere, the study found that 51% of private capital managers expect to use active ownership to fulfil their ESG goals, with 76% placing more emphasis on social issues, and 63% on just transition objectives.
‘Most private capital managers believe ESG investing can add value, improve alignment with asset owners, satisfy their stakeholders and enable them to benefit from investment themes around decarbonisation and the shift to a low-carbon economy,’ BNP Paribas said. Read more here.
