Majority of Investors Remain Committed to Sustainable Investing, Says BNP Paribas Survey
A recent survey conducted by BNP Paribas reveals that a significant number of institutional investors continue to prioritize sustainable investing, with a noticeable shift towards more focused ESG (Environmental, Social, and Governance) themes. This latest edition of the bank’s biennial ESG report, titled “Industry Survey: Institutional Investors Leading the Way,” captures insights from 420 asset owners, asset managers, and private capital firms across 29 countries, collectively managing approximately $33.8 trillion in assets. The study explores the progress made by institutional investors in the realm of sustainable investments, particularly regarding their strategies, priorities, and behaviors.
The findings indicate that 87% of participants maintain their ESG and sustainability goals, with 84% confident that the momentum towards sustainability will either persist or intensify leading up to 2030. Interestingly, 41% of those surveyed lean towards a more cautious approach when it comes to sharing their processes and achievements. Additionally, there has been a noticeable shift away from broad ESG investing, with 85% of respondents incorporating sustainability-related criteria into their investment choices, and 59% engaging in thematic investing.
Among the primary sustainability and ESG objectives identified for the next two years, the respondents highlighted three key areas: increasing investments in energy transition assets (49%), leveraging active ownership to enhance their organizations’ ESG initiatives (47%), and investing in low-carbon assets while divesting from carbon-heavy investments (46%). Investors are increasingly zeroing in on specific themes or geographical regions to uncover opportunities for impactful investments and to enhance their expertise for better returns.
According to the survey’s framework, 19% of participants are classified as “pacesetters,” representing a more advanced group of investors in the sustainable investing realm. These leading investors place significant emphasis on decarbonizing their portfolios (95%), addressing social issues (94%), ensuring a just transition (68%), and promoting biodiversity (86%) within their investment strategies. Among private capital managers, 51% express intentions to utilize active ownership to achieve their ESG objectives, with a strong focus on social issues (76%) and just transition strategies (63%).
The majority of private capital managers recognize that ESG investing can enhance value, align better with asset owners, meet stakeholder expectations, and facilitate involvement in themes centered around decarbonization and the transition to a low-carbon economy. When selecting external banking service partners, investors prioritize criteria such as the partner’s ESG and sustainability reputation (51%), the range of available products and expertise (40%), commitment to long-term relationships (33%), and shared sustainability goals (33%).
To bolster their efforts in acquiring and analyzing reliable ESG data, nearly half of the surveyed investors (48%) plan to increase their budget allocations for sustainable investment strategies focused on ESG data. Despite this, the emphasis appears to be predominantly on the ‘E’ in ESG, as only 29% of respondents regard integrating DEI (Diversity, Equity, and Inclusion) objectives into investment decisions as a crucial aim, a drop from 41% in 2023. Governance aspects also seem to receive limited attention, which underscores the challenges faced by the Global Foreign Exchange Committee in advancing the adoption of the FX Global Code within the buy-side community.
