Mind Shift: Getting Past the Screens of Responsible Investing

Think environmental, social and governance (ESG) is all about excluding sin stocks from portfolios? Think again. ESG goes well beyond the old one-dimensional negative screens of socially responsible investing (SRI), in seeking to proactively manage portfolio risk and identify new investment opportunity.

Over the past year we have tracked sentiment on ESG across three different investor populations to get a fix on how both professional and individual investors look its role and impact. What we found in the responses from institutional decision makers, financial professionals and individual investors globally and defined contribution plan participants in the US was a distinct split in the views of professionals and individuals that challenges conventional thinking about ESG.

We find that individuals believe considerations about the environmental, social and ethical records of the companies in which they invest are important. Institutional investors are more skeptical about the efficacy of these strategies, citing concerns about performance measurement. Professional investors say ESG is likely to become a standard practice, but are looking for stronger tools for measuring performance on ESG factors.

For the full analysis of survey findings, download the complete report.