Capital Group: Equities remain most popular for ESG implementation

Capital Group: Equities remain most popular for ESG implementation

16 oktober 2023

Aandelen ESG
Duurzaam (24) ESG

The proportion of global investors implementing ESG through equities stands at 81%, with three-quarters (74%) preferring active funds to integrate ESG, according to the third annual ESG Global Study* by Capital Group, one of the largest investment companies in the world, with more than US$2.3 trillion1 assets under management.

Equities remains preferred asset class for ESG (81%), but investors look to allocate more to ESG bonds

  • Four in ten (40%) investors believe their ESG equity strategies have a style bias towards growth stocks, but there is growing demand for multi-thematic ESG funds, with 40% saying these could diversify risks stemming from style bias.
  • Around a third (32%) of investors report they are set to increase allocations to ESG bond funds as inflation recedes and interest rates peak.
  • However, nearly half (45%) of investors say there is a lack of fixed income funds aligned to the UN Sustainable Development Goals to invest in.

Transitioning2 companies are seen as key to capturing investment opportunities  

  • Nearly six in 10 (59%) of global investors think that strategies that focus on leaders3 at the expense of transitioners will miss out on investment opportunities.
  • The proportion focusing on a combination of leaders and transitioners has doubled, from 23% two to three years ago to 46% today. This is expected to rise to 54% over the next two to three years.
  • Nearly half (44%) of investors think transitioning companies are undervalued by the market. 

Investors strive to overcome some longstanding barriers to ESG adoption

  • Half (54%) of global investors say consistency and reliability of data is still a very challenging issue for their ESG adoption, although this is down from 62% two years ago.
  • Investors turn to multiple sources to decode data difficulties: 40% rely on proprietary research from active managers and 40% are conducting their own proprietary ESG analysis.
  • With the absence of an industry-wide ESG definition, nearly four in 10 (39%) institutional investors have created their own set of ESG definitions to ensure teams are taking a consistent approach. More than a third (35%) have developed their own in-house approach to categorising ESG funds. 

'This is the third consecutive year we have conducted a global ESG survey. We see investors globally continue to favour an active approach with fundamental research, as this helps identify companies with credible transition plans that will be critical for further ESG adoption', said Jessica Ground, Global Head of ESG, Capital Group.

'This year’s responses suggest a growing appetite for multi-thematic funds as they can offer broader coverage of the ESG waterfront and help neutralise style bias volatility, and for ESG bond funds as inflation recedes and interest rates peak. It is also encouraging to see signs that some longstanding barriers to ESG adoption, like data and definitions, are starting to diminish as the more investors know about ESG, the more they are finding proactive ways of dealing with its challenges.'

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