Climate change now main focus of shareholders engagement

Sustainable investment cynics are in sharp decline says study

Climate change now main focus of shareholders engagement
Steve Randall

Sustainable investment is mainstream for global institutional investors according to a new study.

The Schroders Institutional Investor Study 2019 has found that the share of those who are skeptical about sustainable investment has fallen 50% in the last 3 years and climate change is now a key battle ground.

The share who do not believe in sustainable investment has fallen to just 11% although one-fifth of investors globally (19%) stated that they do not invest in sustainable investment funds.

“This trend is also no longer confined to specific regions globally; investors across all the continents surveyed – including those which are often not associated with a strong sustainable focus – are increasingly convinced by the benefits that sustainable investing can deliver,” Jessica Ground, Global Head of Stewardship, Schroders.

Climate change has become the most important focus of engagement for investors globally, beating business’ corporate strategies.

The rise in importance of sustainable investment is set to continue over the next 5 years according to three quarters of investors. This is led by European investors (84%) followed by North America and Latin America (both on 70%).

“The study emphasises that this is only going to grow over the next five years with the likes of climate change now viewed by investors globally as the most important issue for stewardship engagement,” added Ground. “We believe that establishing a clear understanding of the climate change investment risks facing our clients is a vital step towards managing those associated risks.”

Challenging to invest

While desired, 76% of respondents said that making sustainable investments is at least somewhat challenging.

Led by North American respondents, investors said they need more data or evidence that sustainable investing provides better returns. They also want better ESG reporting.

Globally, 64% of investors said integrating sustainability across the investment process was the preferred method for implementing sustainable considerations.