A lack of reliable data has been named as the top barrier to ESG adoption by investors, a major survey reveals.
The survey by State Street Global Advisors highlights the key push and pull factors for ESG principles adoption across 300 investors globally.
Nearly half of the respondents (43%) put a lack of reliable or consistent ESG data at the top of their pull list, with internal resource constraints and cost implications (43%) and lack of expertise to integrate ESG factors (40%) coming a close second and third.
The survey found pension funds were most likely to cite an availability of reliable ESG data as their top concern at 47%
However, a large proportion of sovereign wealth funds (69%) viewed internal resource costs as a deterrent, indicating partnership opportunities between sovereign funds and asset managers to collaborate on ESG planning.
Other pull factors included concerns over maximising returns (38%), lack of regulatory pressure (30%), and a lack of interest in ESG from beneficiary members (21%).
Of the top push factors, fiduciary duty and regulation were named as the main drivers for ESG adoption at 46% each, followed by a need to mitigate ESG risks (44%).
“That fiduciary duty was cited so highly marks a significant development since many investors previously struggled with whether ESG adoption runs contrary to their fiduciary objectives,” Rakhi Kumar, head of ESG Investments and asset stewardship at State Street Global Advisors said.
Regional differences also existed, the importance of fiduciary duty more pronounced in North America (59%) compared to EMEA (37%) and Asia-Pacific (38%).
Within EMEA, regulatory shifts were the clear top ‘push’ factor closely followed by a desire to mitigate against ESG and reputational risks at 52%, 45% and 39% respectively.
Given the growing prominence of ESG as a significant portfolio consideration, an unsurprising 95% of investors signalled their intention to hire more ESG specialists in the next three years, while the remaining 5% said they intended to encourage staff to become more familiar ESG issues.