Pension funds still too far behind on the ESG criteria

Less than one in two investors carry forward the zero emissions target in their portfolios and only one in three aim to reach net zero by 2050. In contrast, 72% of insurers have made firm commitments: according to data from Aviva Investors research.

Global institutional investors said they are personally committed to the ESG agenda – despite recessions, unemployment, and financial tensions around the world. Low performance is no longer a fear for anyone and even retail investors are now demanding more sustainability. But something is still missing.

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What do investors think about sustainability goals

According to Morningstar data in May, Aviva Investors recalled in a report released in early November, in the first quarter of 2020, the global sustainable funds universe attracted $45.6 billion in net inflows compared to outflows of $384.7 billion for the total funds universe. 

According to Bny Mellon and the Official Monetary and Financial Institutions Forum, more than 90% of global public investors have specific ESG investment policies in place or are developing them. Currently, eight out of ten investors said that the pursuit of sustainability goals is no longer at the expense of financial returns and 81% stated their organization is committed to investing in a more sustainable way.

According to Aviva Investors’ latest “Real Assets Study”, international institutional investors intend to prioritize investments in real assets over the next 12 months as the COVID-19 pandemic will continue to have a lasting impact on global economies and financial markets. The study – based on responses from more than a thousand insurance and pension fund decision-makers representing more than $2.33 trillion (€2 trillion) of assets under management – showed that 49% of insurers and 37% of pension funds plan to increase their allocation to real asset investment strategies.

What is the most important feature to look for in an asset manager

Given the pace at which the integration of ESG criteria is maturing in the markets, both insurers (59%) and pension funds (56%) see transparency of sustainable investment approaches as the most important feature to look for in an asset manager. The study also reveals an increasing focus on social responsibility among real asset investors. The inclusion of healthcare in portfolios was an important factor for 55% of insurers and 45% of pension funds; investments in social housing (51% for the former, 42% for the latter) and education (46% and 42% respectively) were also considered relevant.

Given the increased efforts of investors to align their portfolios with the goal of zero net emissions, investments with a positive environmental impact continued to be supported: in fact, 58% of insurers and 48% of pension funds paid attention to energy-efficient real estate.

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(Featured image by Huskyherz via Pixabay)

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First published in WE WEALTH, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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