Asset managers accelerating investment in ESG across asset classes

The survey indicated that predictions for ESG growth had advanced significantly from where they were just a year ago. ESG components are anticipated to be included in asset management portfolios in 40% of cases within the following 12 months, an increase of 13% from the IIA’s 2021 ESG survey.

All asset classes now incorporate ESG factors more frequently, with fixed income being the ESG asset class with the quickest growth. In fact, compared to 42% in 2021, 76% of businesses currently use ESG criteria for fixed income investments. This puts fixed income on par with equity, which increased from 53% of companies in 2021 to nearly 74% in 2022 and has long been considered the “traditional home” of ESG.

ESG requirements for commodities are also increasing noticeably. Nearly half of fund management firms examined (47%) using ESG criteria for this asset class today compared to 37% in 2021.

Although most asset managers polled include all three ESG factors in their portfolios, this year’s survey reveals that the ‘Environmental’ pillar is given precedence. For ESG investors, climate change issues rank highly in the environmental dimension.

In the study, more than nine in ten (93%) participants said that environmental impact tracking tools, measures, and services were either highly or reasonably successful.