The investment research firm’s 2021 Global Institutional Investor Survey found that 77% of investors have “significantly” or “moderately” increased ESG investments as a response to COVID-19.
This figure is 90% for institutions with over $200 billion in assets, one-third of which also said that climate risk is the number-one matter that will impact how they invest over the coming three to five years. Investors controlling under $25 billion in assets said increasing regulations and market volatility were the top matters affecting their investments over the same time period.
The survey covered 200 asset owner institutions, including sovereign wealth funds, pension funds, insurers, and endowments and foundations, with a collective $18 trillion in assets. It also found that larger investors, those with over $200 billion in AUM, more readily used climate data than smaller ones, who are only just beginning to incorporate climate data in investment strategies.
Investors are facing many challenges around the globe, and are accordingly seeing diversifying risk as more important than traditional asset allocation in making investments.
Investors are also putting increased emphasis on the social competent of the ESG equation.
Baer Pettit, president and chief operating officer, MSCI said: “The combination of climate-related events, such as devastating wildfires, floods and droughts, and a global pandemic have accelerated the paradigm shift on ESG and climate change. Once an issue for ‘green funds’ and side-pockets, ESG and Climate are now firmly established as high priority issues. 2020 marked a profound shift in the way institutions invest as many investors have recognised that many companies with strong environmental, social and governance practices outperformed during the pandemic.”