ESG integration rises among institutional investors

More financial institutions are deploying a broader range of environmental, social and governance (ESG) strategies to meet rising demand for more sustainable investments, according to findings by Natixis Investment Managers.

Approximately three-quarters of professional investors, including 72% of institutional investors and 77% of the gatekeepers who select funds for their firm’s investment advisory platform, are now implementing ESG, up from 61% and 65%, respectively, since 2018.

The pace of growth accelerated in 2020, amid record inflows into ESG funds and an unprecedented number of ESG product launches, the asset manager said.

This year, 68% of professional fund selectors plan to further expand their firm’s ESG offerings. Their primary reason for doing so is because of investor demand, which fund selectors believe stems from investors’ heightened social awareness and the fact that ESG investing has now reached critical mass among mainstream investors.

“The rapid global adoption of ESG has raised questions about whether the momentum building around ESG will continue or if it’s building toward a bubble,” said Harald Walkate, head of ESG for Natixis Investment Managers.

“The answer lies in greater clarity about what investors ultimately want to achieve, not only to deploy ESG strategies that align with their values but also to set realistic expectations for both financial results and societal impact.”