A survey of 50 investment funds, pension funds, investment banks and sponsors reveals that investors are more focused on ESG issues than ever before
Inframation is pleased to present The new investment reality: Why ESG matters, published in association with GHD Advisory, Bird & Bird and ITPEnergised.
This report provides insight into the continued rise in the prevalence of ESG scrutiny – a trend which was already on the up, even before the Covid-19 pandemic profoundly impacted infrastructure investment.
Key findings include:
- While equity investment in ESG funds increased almost fivefold in the UK alone in 2020, the ongoing ESG boom looks to be extending across all asset classes. The vast majority (92%) of respondents surveyed say that their company identifies ESG performance as instrumental in a clear-long term value creation strategy. This trend looks set to continue apace, with nine in ten respondents saying they expect scrutiny of ESG issues during deals to increase over the next three years, including 82% who predict this increase to be significant.
- Investors are focusing more broadly on all the aspects of ESG than previously. While governance and environmental issues continue to weigh heavily on investment, social issues are coming into their own. When asked about each aspect of ESG, greenhouse gas emissions and carbon management was the leading environmental consideration, with 60% of respondents citing this issue. Meanwhile, 52% of investors highlighted labour standards as a leading social issue, and political influence led the way in terms of governance considerations (60%).
- Familiar concerns still loom over ESG as many points of contention remain. One of the biggest challenges facing investors is a lack of consensus on a basic definition for ESG and what it encompasses. Some 60% of respondents cite this lack of clarity on standards as a pitfall for ESG investments, while 50% point to the difficulty of securing good quality data on sustainability on which to base investments.
Download the report here