A new FTSE Russell survey finds 84% of asset owners now embed sustainability and governance concerns are driving the agenda
Sustainable investment is quietly gaining ground again, and this time it is governance, not climate, leading the conversation.
That is one of the central findings from FTSE Russell's ninth annual Global Asset Owner Survey, published this week, which surveyed 402 institutional investors across 24 countries on their priorities, concerns, and evolving approaches to sustainable investment.
The results show that 84 per cent of asset owners are now incorporating sustainability considerations into their investment strategies, up from 73 per cent in 2025. A further 15 per cent are evaluating implementation, meaning nearly all respondents are either already acting on sustainability or actively working out how to do so, a level of adoption not seen since 2022.
Governance takes the lead
The most notable pivot in this year's data is the rise of governance as the dominant ESG priority. Governance, tax and shareholder rights has emerged as the most cited sustainability priority, rising from 18 per cent of respondents in 2025 to 32 per cent in 2026.
That finding aligns with a broader trend identified in a separate 2026 GlobeScan survey, in which nearly half of corporate leaders globally ranked governance as the top ESG reputational risk for their organisations this year, up sharply from 2024 levels.
Climate physical risk is also attracting greater attention, now ranked a priority by 26 per cent of respondents, compared with 19 per cent in 2025. The growing material impact of extreme weather events and the compounding uncertainty of the global policy environment appear to be bringing physical risk, as distinct from transition risk, into sharper focus for institutional investors.
Beyond traditional ESG pillars, respondents are also tracking a wider set of systemic threats.
Health and healthcare-related risks (25 per cent), technology and AI-related risks (24 per cent), and food security (19 per cent) were identified as emerging areas of concern. For advisors building long-horizon portfolios, the expansion of sustainability considerations into these domains may require clients to revisit how comprehensively their investment mandates address structural risk.
Adoption is deepening, not just widening
What is perhaps most significant for practitioners is where sustainable investment is being applied. More than half of asset (51 per cent) now apply sustainability considerations to over 50 per cent of their assets, suggesting that sustainable investment approaches are increasingly being incorporated into mainstream investment decision-making.
The appetite for more targeted implementation is also on the rise. The use of custom sustainable investment indices in passive allocations increased from 21 per cent in 2025 to 35 per cent in 2026, reflecting demand for more tailored and cost-effective ways of implementing sustainable investment objectives.
Stephanie Maier, Global Head of Sustainable at FTSE Russell, said the results reflect a maturing institutional approach to the asset class. "Asset owners continue to embed sustainability factors more deeply into investment decisions, despite market volatility and policy uncertainty," Maier said. "Sustainability is increasingly part of core investment practice - a routine element of portfolio construction and risk management."
Corporate reporting remains the sticking point
Not all the survey's findings point to smooth progress. While some barriers have eased - concerns about greenwashing (down to 22 per cent from 37 per cent in 2025) and ESG data availability (down to 25 per cent from 36 per cent) - a new friction point has moved to the top of the list.
The quality of corporate reporting is now cited as the number-one barrier to increased sustainable investment adoption, identified by 33 per cent of respondents. This concern coincides with a levelling off of sustainability-related corporate reporting rates and regulatory shifts affecting disclosure frameworks in both Europe and North America.
For Canadian advisors, this is a particularly live issue. Canadian financial firms have faced sustained criticism for lagging on ESG disclosures — an issue explored in depth in coverage from Wealth Professional on Canadian firms and their ESG disclosure shortfalls. Where corporate reporting is inconsistent or incomplete, advisors must do more of the due diligence work themselves to validate ESG claims embedded in investment products.
The regional picture is increasingly uniform. Adoption rates across North America (85 per cent), EMEA (83 per cent), and Asia Pacific (84 per cent) are now closely aligned, a convergence that underscores how sustainable investment has moved from a predominantly European institutional preference to a near-universal professional standard.
Wealth Professional has previously reported on how advisors are navigating the growing complexity of sustainable investment strategies for Canadian clients and on what the future of ESG-focused practice management looks like as both client demand and reporting expectations continue to evolve.
The full FTSE Russell Sustainable Investment Asset Owner Survey is available via LSEG at lseg.com.
