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Jun 22, 2020

North American investors still lag in focus on environmental and social issues

Research finds IR is most likely department to field investor questions on E&S topics

North American investors continue to show less interest in environmental and social (E&S) issues than their European peers, according to new research from IR Magazine.

The Measuring E&S 2020 report finds that 78 percent of European investors view environmental metrics as important to their investment decisions, compared with 46 percent in North America.

A similar pattern holds true for social metrics: in Europe, 73 percent of investors say they are important, while the figure is just 44 percent in North America. 

Asset managers are far more unified in their approach to the third aspect of ESG: the vast majority of investors in both Europe and North America say governance metrics are critical to the decisions they make. 

The IR Magazine report investigates the views of investors and IR professionals on environmental and social issues, covering topics such as ratings agencies, engagement practices and ESG reporting. 

The research took place before Covid-19 became a global crisis, so the importance of social factors – a key focus of investors and companies during the pandemic – is likely to have grown. 

The findings underline the broad differences that remain between regions in how they approach ESG issues. Europe has long set the pace globally, accounting for 82 percent of assets held in sustainable funds, compared with just 14 percent in the US, according to Morningstar.

The US market, however, saw its global share of inflows to sustainable funds rise in the first quarter of 2020, notes the data provider. 

‘While interest in sustainable investing has been higher in Europe for some time, especially among institutional investors, interest in the US certainly seems to be catching up,’ says Jon Hale, head of sustainability research at Morningstar, in an article

With investors upping their focus on ESG, IR teams are taking a leadership role in managing incoming inquiries, notes the Measuring E&S 2020 report. On a global basis, almost 70 percent of IR teams say they are typically responsible for handling investor questions on environmental and social issues. 

Around four in 10 respondents say they try to respond to every environmental or social question, while nearly a quarter say they prioritize their time based on the investor’s assets under management or importance on the share register. 

Click here to read the full Measuring E&S report 2020.