According to a new survey entitled ‘Sustainable Signals: Growth and Opportunity in Asset Management’, 75% of U.S. asset managers reported that their firms have adopted sustainable investing, up from 65% in 2016. The survey was conducted by the Morgan Stanley Institute for Sustainable Investing and Bloomberg.
“The survey results demonstrate that sustainable investment strategies are now a strategic imperative,” said Matthew Slovik, Head of Global Sustainable Finance at Morgan Stanley. “It is clear that asset managers will continue to invest new resources and expand their product portfolios in the coming years.”
Respondents cited several key drivers of success in sustainable investing, including increased investment stability, high client satisfaction, product popularity and possible high financial returns. Despite the recognition of the strategy as a business imperative, almost all asset managers highlighted the need for increased expertise, better data and impact reporting to drive future success in the space.
“As investors increasingly consider sustainability factors across asset classes and investment products, we expect to see a shift toward better data tracking and reporting mechanisms,” noted Curtis Ravenel, Global Head of Sustainable Business & Finance at Bloomberg. “This will increase credibility and improve measurement of impact across portfolios.”
Results from the 2018 survey identify sustainable investing as a mainstream strategy that will continue to grow as an investing strategy in years to come. Key findings include:
Sustainable Investing Goes Mainstream
- Three in four U.S. asset managers say their firms now offer sustainable investing strategies, up from 65% in 2016.
- Asset managers overwhelmingly agree that sustainable investing is no longer a fad, with nine in 10 (89%) saying it is here to stay and 63% expecting it to continue to grow in the next five years.
A Financial Case for Sustainable Investing
- As sustainable investing matures, asset managers are putting financial considerations at the forefront of their sustainable investment strategies.
- 82% think strong ESG practices can lead to higher profitability and that companies with such practices may be better long-term investments.
- Almost two thirds of asset managers (62%) believe that it’s possible to maximize financial returns while investing sustainably.
Product Types Proliferate, Expanding Investor Choice
- As more firms embrace sustainable investing strategies, they are offering more ESG-tailored investment vehicles and expanding investor choice.
- Many employ a full spectrum of sustainable investing approaches, with 63% employing more than one strategy across shareholder engagement, restriction screening, ESG integration, thematic investing and impact investing.
Expertise, Better Data and Impact Reporting Will Support Customization and Drive Future Success
- Nearly all (89%) respondents report their firms will devote more resources to sustainable investing in the next two years. Common strategies for developing in-house skills and capacity include employee training (41%), dedicating more employee time (36%) and specialist hires (34%).
- Seven in 10 asset managers agree that the industry lacks standard metrics to measure nonfinancial performance of sustainable investments. The field is wide open for better data and the development of impact measurement tools.