Institutional investors in Canada, the United States and the United Kingdom are committing more of their assets to environmental, social and governance (ESG) principles, according to the 2019 RBC Global Asset Management (RBC GAM) Responsible Investing Survey.
Investors are adopting this ESG-based approach as a way to enhance returns and mitigate risk, the study found.
The percentage of survey respondents who reported using ESG principles rose 3% in the US since 2018, 5% in Canada and 30% in the UK.
However, the total percentage of institutional investors using ESG principles as part of their investment approach and decision making process remained flat compared to last year at 70%.
ESG adoption in the US remained flat compared to 2018, at around 65%.
The overall average level of actively managed institutional ESG-based portfolios is currently 61%. About 28% of institutional investors said their entire ESG-based portfolio is actively managed, with 10% saying their entire ESG-based portfolio is passively managed.
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Nearly 67% of respondents ranked cybersecurity as being one of the top ESG issues when investing. About 66% of respondents had concerns about anti-corruption.
Regionally, the percentage of institutional investors in the UK and Canada increased, reaching 97% and 80%.
RBC GAM vice president and head of corporate governance and responsible investment Melanie Adams said: “This new data confirms that while the multi-year trend of rapid increases in ESG adoption by institutional investors may be tapering off, the vast majority of these asset owners are still committed to using ESG principles in their investment process.
“It is also noteworthy that institutional investors in the US, Canada and the UK, who already significantly incorporate ESG into their investment decision-making are more convinced than ever that this approach helps lower risk and increase returns, and these investors are committing a larger percentage of their portfolios to an ESG-based approach.”