The number of investment professionals taking account of ESG factors has remained the same (73% at least consider environmental, social, or governance) year-over-year, according to the CFA Institute, in its latest ESG survey.
The survey’s results indicate that while interest in each component has increased around the globe, interest in integration (into investment decisions and analyses) may be plateauing, or maturing in a way where growing adoption may be slowing.
A Passing Fad?Why This Matters
“While it is clear that the integration of ESG into the investment process is not a passing fad,” Matt Orsagh, CFA, says, “increased demand from clients, better quantity and quality of ESG data, and increased practitioner training could enhance the ability of financial investors to incorporate ESG data into the investment process, and thus increase adoption.”
“ESG-related disclosures can improve the transparency of the global capital markets through more thorough reporting of the long-term issues facing publicly traded companies.”
Three Big Limitations
CFA Institute’s 2017 ESG Survey respondents confirmed that the three factors that most limit their organization’s ability to use non-financial information in investment decisions are: a lack of appropriate quantitative ESG information, a lack of comparability across firms and questionable data quality.
“There’s a gap between the quality of information that’s provided by companies and the suitability of this information to what investors need. There’s an information gap,” Vincent Papa, director, financial reporting policy for CFA Institute says, “and the need for initiatives that increase the quality of ESG information.”
Read More
“CFA Institute ESG Survey 2017,” CFA Institute, July 2017.
“Use of ESG Data in Investing is Maturing,” Seeking Alpha contributor Matt Orsagh, October 2017.
“Improving the Quality of ESG Data,” Financial Advisor, November 2017.
“ESG Investing Grows in All Regions, Pensions and Investments,” October 2017.
“How Much Do Investment Professionals Care About ESG,” City AM, October 2017.
