More than 84% of asset managers are actively pursuing or have at least considered sustainable investing according to fresh research by Morgan Stanley.
Globally more than $22.8trn has been invested sustainably representing a fundamental shift in the way asset managers perceive environmental, social and governance factors (ESG).
More than three in four (78%) of firms said they seek to align with the United Nations Sustainable Development Goals.
Private equity and real assets are the sectors with the most attractive sustainable investment opportunities, while hedge funds are the least popular, the study found.
Hilary Irby, co-head of global sustainable finance at Morgan Stanley, said: “The survey results identify a strong commitment to incorporating ESG criteria into investment strategies among asset owners. However, there is still a gap between interest and implementation – with investors citing access to quality ESG data as a top concern,”
Irby added: “With this growing momentum in sustainable investing, third-party managers have an opportunity to increase implementation by improving reporting tools and education, and developing capabilities to align portfolios with owners’ unique objectives.”
Other highlights of the survey include:
- 60% of firms polled began implementing strategies in the last four years
- 70% of asset owners have already implemented ESG strategies with (49% implementing across entire portfolio and 21% partially implementing it)
But the survey showed that lack of tools and data is a barrier with only 42% feeling they have the tools to engage in ESG practises.
Morgan Stanley said: “The lack of reliable data is a real challenge for asset owners but within that challenge lies opportunity for asset managers and third-party data providers. With better tools, information and training, interest in sustainable investing is poised for continued growth.”
In May research by Private Banker International (PBI) found that lack of quality ESG data was a significant barrier to firms willing to invest in this clearer definitions and taxonomies about what constitute ESG products.
Morgan Stanley’s research polled 118 public and corporate pensions, endowments, foundations, sovereign wealth entities, insurance companies.