Asset owners intend to double the value of their ethical investments in the next two years, a survey claims, but questions remain around data quality, the effectiveness of the analytical tools available and costs.
The BNP Paribas survey found that the 45% of asset owners with up to 25% of their investments incorporating environmental, social and governance (ESG) standards intend to double this to 50% of funds invested by 2019.
BNP Paribas Security Services investment risk and performance product specialist Trevor Allen described the survey as a “tipping point” for ESG adoption.
However, problems capturing and drawing viable conclusions from data could limit ethical investment growth. Improved analytic technologies will have to emerge to quell concerns over the lack of robust data, which are held by 64% of the asset owners surveyed.
Cost could be another barrier blocking growth, with 27% citing this as deterrent to greater ESG adoption in the next two years as the outlay in identifying and analysing data rises.
Asset owners and managers undeterred from expanding their ESG investments could be targeting a shift into alternative assets, such as hedge funds, infrastructure, real estate, private equity and debt. They expect to increase their ESG-linked investments in areas such as these by 20% in the next two years, while their ethical allocation in equities falls by 26%.
Great Expectations: ESG – What’s next for asset owners and managers questioned 461 asset owners and managers from around the world with around $5.4trn under management.
