According to the study, which surveyed 500 global investors in 11 countries, only 29% of respondents said ESG factors are being considered for more than half of their organisation’s total assets under management.
When asked about barriers to full implementation of ESG strategies, investors cited concern about impact on returns, lack of available products and reluctance of clients and stakeholders as top factors.
Despite this, the vast majority (85%) of surveyed investors said they believe ESG factors are material to investment policy, while 70% feel ESG factors have become more material in the past five years.
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About two-thirds of allocators said they have seen a significant improvement in the quality of ESG data, ratings, indexes and tools available over the past five years. However, they said there is still room for ESG tools to improve.
Nearly half (48%) of investors noted that ESG tools could benefit from more accuracy, while 42% said from more timeliness and 41% from more objectivity of ESG data.
Respondents also pointed out that developments in regulation, data, reporting, analytical tools and investment processes appear to be interdependent, with each aspect shaping and being shaped by the others.
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Tom Kuh, Morningstar Indexes head of ESG strategy, said: “Findings show ESG considerations to be a major driver of asset owner investment policy, but we are still far from full investment portfolio implementation.”
“We were reminded through our discussions with asset owners of all shapes, sizes and approaches around the world that ESG investing is complex as well as diverse and is progressing at different speeds and stages.”
