Institutional investors confident in ESG-integrated portfolios: RBC survey

Responsible investing is growing among institutional investors, with almost three-quarters using environmental, social and governance (ESG) principles as part of their approach, an RBC Global Asset Management survey says.

Most of the global institutional investors polled (72%) “either somewhat or significantly use ESG principles as part of their investment approach or decision-making,” the survey found, a rise from 66% in 2017. The number of institutional investors who don’t use ESG principles fell globally to 28% from 33% last year.

Equities are the most popular way to invest responsibly: 84% of those who use ESG principles in their portfolio management process did so in equities. But 60% of those using ESG principles also incorporate them into their fixed-income portfolios, 43% use ESG in real estate, 36% use those factors in infrastructure and 34% with alternative assets.

The survey also showed increased confidence in ESG principles: 90% said that portfolios with ESG do just as well or better than other portfolios.

Other highlights from the survey include:

• 38% said using ESG principles can help generate alpha, but 42% aren’t sure
• Half of those polled who use ESG principles in their investment approach say they have a fiduciary responsibility to do so
• 42% believe shareholder proposals are an effective way to achieve gender diversity on boards
• Companies associated with munition or landmines are most likely to be excluded (75%) from the portfolios of institutional investors who use negative screening in their portfolios, followed by weapons (66%), tobacco (60%) and fossil fuels (42%)
• Only 23% of Canadian investors screen for fossil fuels versus 62% in the U.S.

Read the report here.

Methodology

Responsible Investing: Charting a Sustainable Advantage is RBC GAM’s third annual survey of institutional investors’ perceptions and intentions regarding responsible investing. For this year’s report, RBC GAM, which includes BlueBay Asset Management, surveyed 542 institutional asset owners and investment consultants in the United States, Canada, Europe and Asia.