Lack of data hindering investor ESG take up

Investors have cited a lack of reliable data as their top obstacle to ESG adoption, a major survey reveals.

The survey, which comprised responses from 300 institutional investors globally, including private and public pension funds, endowments, foundations and official institutions, highlights the key push and pull factors for ESG adoption across the firms.

According to
the poll, conducted by State Street Global Advisors, nearly half of investors (44%)
put a lack of reliable or consistent ESG data at the top of their pull list.

The
investors said single-sourced, confusing terminology was a major hinderance to
accurately assessing the credentials of companies and their portfolio-level
impact.

Internal resource
constraints and cost implications (43%) came second on the pull list, closely
followed by a lack of expertise to integrate ESG factors (40%).

However, the study revealed pension funds were most likely to cite the availability of reliable ESG data as their top concern at 47%.

Other pull
factors lower down the list included concerns over maximising returns (38%),
lack of regulatory pressure (30%), and a lack of interest in ESG from
beneficiary members (21%).

On the flip
side, investors identified fiduciary duty and regulation as the main drivers
for ESG adoption at 46% each, followed by a need to mitigate ESG risks, which
got 44% of the vote. 

“That
fiduciary duty was cited so highly marks a significant development since many
investors previously struggled with whether ESG adoption runs contrary to their
fiduciary objectives,” Rakhi Kumar, head of ESG Investments and asset
stewardship at State Street Global Advisors said.

Given the growing prominence of
ESG as a significant portfolio consideration, an unsurprising 95% of those
surveyed signalled their intention to hire more ESG specialists in the next
three years. The remaining 5% percent intend to encourage their staff to become
more familiar with the concept.