Investors in smart beta funds who are implementing ESG considerations into their portfolios for the first time are most likely to prioritise governance issues and carbon monitoring, a new study shows.
FTSE Russell’s 2019 Annual Smart Beta Survey charted the views of 178 investors in 70 countries who were looking to include ESG considerations into the smart beta element of their portfolio for the first time.
Of these respondents, governance was considered a key issue for 74% of respondents, while two thirds of people said carbon reduction was also important. Slightly fewer investors (64%) said that the social impact implications were important to them.
The overall interest in implementing ESG considerations into smart beta strategies has rocketed over the past 12 months, since the last survey was conducted. The research shows that interest in having some kind of ESG consideration has risen from 22% in last year’s survey to 77% in 2019.
“Integrating or looking to integrate ESG into smart beta strategies is rapidly becoming the norm, especially in Europe, where over three-quarters of asset owners have already applied or intend to apply ESG into smart beta allocations,” explained David Harris, head of sustainable investing at FTSE Russell.
“We call this integration ‘Smart Sustainability’ and these trends are reflected in our experience of working with clients in new smart beta mandates.”
The number of European respondents who claimed that they intend to implement or evaluate ESG metrics within their smart beta investments has grown from 55% in 2018 to 77% in 2019.
Those interested in reading the full report, can do so, here.