Investors continue push into ESG despite greenwashing concerns

investmentweek.co.uk:

Those ‘on the sidelines’ about ESG has continued to steadily decrease, falling globally from 13% in 2021 and 10% in 2022, to 8% this year.

In its third annual ESG Global Study, the firm found that only 2% of investors said they would not adopt any ESG considerations into their investment approach, rising to 7% for North American investors.

The number of investors admitting to be ‘on the sidelines' about ESG have continued to steadily decrease, falling globally from 13% in 2021 and 10% in 2022, to 8% this year.

In this year's survey, investors cited more convincing evidence showing a positive relationship between ESG and performance as the top adoption driver for taking a sustainable approach, rising from 33% last year to 42% in 2023.

Number of climate-focused funds surges 600% in the past five years

Russia's invasion of Ukraine was also highlighted as a driver, with 46% of investors agreeing that the invasion had «reinforced the importance of investors supporting the low-carbon transition».

However, greenwashing is increasingly on the minds of investors, with 59% of investors agreeing that it could «trigger the next misselling scandal», up from 52% in 2022.

«The greenwashing issue is bad,» said the CIO of an Italian independent advisory firm in response to the survey. «But in my opinion, greenwashing is an issue at the investee company level rather than the asset manager level. A lot of companies only present positive numbers.»

Half of investors now also believe that greenwashing is prevalent in the asset management industry, up from 48% last year.

Another issue holding investors back from pushing further into ESG funds was a lack of SDG-aligned funds for them to invest in.

Nearly half (45%) of investors surveyed said