Queries around performance implications are acting as a barrier to wider acceptance of ESG among investment intermediaries in the US, according to research published by Cerulli Associates.
The Cerulli Edge – US Monthly Product Trends report suggests that there are two key challenges ongoing in respect of environmental, social and governance factors.
Firstly, is the aformentioned reference to performance. Just 19% of those surveyed stated that sustainable investment returns are a “major factor” driving demand for ESG. In contrast, some 35% of those investment advisers surveyed who are not currently using ESG noted a “negative impact on investment performance” being a “significant factor” preventing them from implementing ESG, Cerulli stated.
Secondly, although manufacturers (asset managers) may have incorporated ESG factors/criteria into their investment processes, this has not necessarily led to actual investments, because of the distribution challenge outlined. What needs to happen, Cerulli argues, is integration of ESG factors that includes “robust data” sourced from both proprietary and third party sources.
Further information is available at: The Cerulli Edge – U.S. Monthly Product Trends Edition, June 2018 Issue.