Institutional investors in Europe and Asia lead in ESG investments

Written by Adam Cadle

23/08/2023

Institutional investors in Europe and Asia are at the forefront of adopting ESG investment strategies, while North America lags behind, according to a new blog published by Coalition Greenwich.

Globally, 75% of investors incorporate ESG strategies, with Europe leading at 92%, followed by Asia at 76%. However, North America trails at 53%, driven mainly by Canadian investors.

Coalition Greenwich said the top objective for using ESG is now to make a positive impact on society, particularly the environment. Investors’ ESG considerations differ across regions, with Europeans focusing on climate change and carbon emissions, North Americans emphasise diversity and inclusion, and Asians prioritise business ethics.

Net-zero targets have gained traction, with 15% of institutional investors globally setting such targets, and around a quarter of European investors adopting them. In contrast, only 5% of North American investors have implemented net-zero targets.

ESG knowledge is a crucial factor in selecting investment managers, with European and Asian investors considering it early on. However, only 6% of managers excel in communicating and providing evidence of ESG performance, while nearly 40% are considered ‘good’.

Looking ahead, around 70% of large institutional investors plan to increase ESG integration in their allocations, especially in equities and fixed income. Additionally, over half of current ESG investors expect to change investment managers on more than 10% of their portfolios in the next five years, with the trend led by the EU and Asia.

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