NN IP: 46% of investors say a lack of RI opportunities will prevent RI from becoming mainstream
Responsible Investing (RI) has become a buzzword in the asset management industry as the number of solutions catering to the more environmental, social and governance (ESG) conscious investors continue to proliferate. But the survey ‘Investor Sentiment: Responsible Investing’ commissioned by NN Investment Partners (NN IP) shows that almost half (46%) of professional investors are still concerned that the range of investment opportunities that exist are not sufficient for RI to become a mainstream proposition.
Our survey clearly illustrates a growing appetite for RI solutions among professional investors, but a still relatively high percentage (44%) say there is a lack of research and information about responsible investment opportunities to guide them in their decision-making, compared to the 19% who are satisfied with the amount of research data and information available. While half of the investors in the survey think that responsible investing can have risk management implications.
Source: NN Investment Partners’ Investor Sentiment: Responsible Investing survey, May 2019. 290 professional investor respondents.
Jeroen Bos, Head of Specialized Equities & Responsible Investing at NN Investment Partners says: “It is encouraging to see the increased interest in RI solutions. At the same time, it is worrying that still a relatively large number of investors feel there are too few opportunities to invest in a responsible manner and that there is seemingly still insufficient information with regards to these opportunities. This means that we as asset managers have to work harder to improve the visibility of our responsible investing approach and the broad and expanding range of RI solutions that are already available. We also need to increase transparency on how we integrate and report on ESG criteria. The world of RI is changing rapidly and although the pace may differ between geographical regions and asset classes, the direction is clear. It has become mainstream and it is here to stay.”
“The perception that applying ESG criteria results in a more limited investible universe could be one reason why half of our respondents believe that it is more difficult to manage investment risk than it is with more traditional solutions. We would argue that incorporating ESG criteria into the investment analysis actually improves risk management and simply results in a more complete approach to investing. There are numerous studies that confirm that integrating ESG criteria into the investment process helps improve risk-adjusted returns across a range of asset classes and our proprietary research also demonstrates that excluding companies that have shown controversial behavior can also benefit performance. At NN IP, our ESG integrated research process, in combination with our academic research partners and ESG data providers, helps us identify a wide variety of responsible investment opportunities across the globe. This enables us to build attractive investment solutions for our clients, solutions that actually have comparable, or even better, risk/return characteristics than traditional solutions.”
Source: NN Investment Partners’ Investor Sentiment: Responsible Investing survey, May 2019. 290 professional investor respondents. Respondents were drawn from five main areas: France, Germany, the Netherlands, Italy and Belgium, with a further panel of respondents collected from the UK and Scandinavia.
Source: NN IP meta-analysis of research conducted by Breckinridge Capital Advisor and MIT Sloan School of Management (2016)