Mercer survey shows climate change is top concern among investors
Most institutional investors say the incorporation of ESG criteria in their management policies increases risk-adjusted returns while more than two thirds say their stakeholders are concerned about ESG issues, according to the latest Mercer report.
Mercer’s March survey into ESG attitudes shows that 57 percent of respondents believe ESG policies boost risk-adjusted returns while 34 percent say they lower their returns and 9 percent say they have no effect. About 20 percent see ESG issues as ‘very important’ to their stakeholders while 49 percent say they are ‘somewhat’ important.
Of the institutional investors that incorporate ESG criteria into their decision-making processes, 41 percent say they will prioritize the use of ESG data in investment decisions in the near term, while 37 percent say they will focus on providing more detailed ESG reporting and 25 percent plan to make the establishment of an ESG policy statement a priority.
The survey of 97 respondents in 22 countries shows carbon intensity and others issues related to climate change are the most common concerns of institutional investors, with more than half citing them as their top environmental issues, while about 5 percent rate them second and almost 10 percent rate them third. Overall, these are concerns for about 68 percent of respondents. Water scarcity comes second, with two thirds of investors mentioning it as a concern, followed by pollution and environmental degradation, cited by about 25 percent.
‘Issues that are identified as having the potential to materially impact a company’s risk profile as well as financial performance are viewed as significant, whereas those more commonly associated with ethical investing (for example, the exclusion of tobacco, gambling, alcohol and adult entertainment) find limited support,’ the report notes.
European institutional investors are most likely to include ethical concerns among their ESG criteria, with 65 percent from the region citing ethics as a driver of ESG integration. North America comes next, at 58 percent, followed by Asia with 38 percent.
