Sustainable investing is an investment approach that considers environmental, social and governance (ESG) criteria in selecting and managing investments. It is now moving away from a niche status to a mainstream consideration.
Global sustainable investing AuM more than doubled from 2012-18 to reach USD31tn
Nevertheless, there is significant headroom for further growth, as sustainable investing assets account for only c.30% of all professionally managed assets globally
ESG factors are clearly a key consideration in investing, both for asset managers and asset owners
However, there are challenges in integrating sustainability into the investment research process given that ESG research is still in its infancy
Investors are concerned that increased focus on ESG analysis would distract asset managers from their primary duty of return maximization