A recent survey of hiring patterns among ESG data professionals will cheer market participants who repudiate claims that the sustainable investment movement is on the wane.
Asset managers dedicated a tenth of their ESG recruitment expenditure to hiring data integration and analytics expertise in the past year as they stepped up reporting of ESG metrics. The ninth annual survey of money managers’ ESG chiefs by Russell Investments also found that 75 per cent of the 169 firms surveyed had taken on ESG specialists.
The report comes weeks after a Bloomberg survey showed a sharp increase in the number of firms planning to step up their ESG data purchase plans. Taken together with other studies showing growing support for sustainable investment strategies, the latest survey will hearten pro-ESG professionals. As an anti-ESG backlash roils sustainability markets, proponents argue that data like that from Russell Investments proves that reports of ESG’s demise are greatly exaggerated.
“The results of this year’s survey indicate that despite its share of challenges, ESG investing is here to stay for the long haul,” the report’s authors concluded. “Active managers from all major asset classes continue to incorporate ESG considerations in their investment processes and hire for ESG-related roles. As climate concerns surge to the forefront, we expect ESG to only become further rooted in the investment landscape.”
Backlash
ESG has become a contentious issue among conservative forces, particularly in the US, where they have conflated sustainable investment with anti-capitalistic – or “woke” – sentiment. It has been made a battle front in a divisive culture war that’s raging through world politics. Republican states in the US have sought to ban the investment of public pensions into ESG funds or instruments and conservative media and commentators have weighed in, with one pronouncing ESG as dead in a prominent UK business newspaper.
But data suggests the impact of this backlash has been limited.
Russell Investments’ latest Manager ESG Survey found that the hiring of ESG recruits continued as they increased the reporting of ESG metrics. It found that 66 per cent of asset managers had reported ESG metrics on all strategies – both ESG-labelled and non-ESG labelled. That compares with 59 per cent last year.
The trend was reflected in a decrease in the number of managers who said they reported ESG metrics only on ESG-labelled strategies.
While a greater number of respondents said they had not reported more ESG metrics, the authors suggested this was because the responses were dominated by those from private market participants.
More Data
The report doesn’t stand in isolation. The Bloomberg survey from the summer reported that of 103 asset managers, private bankers, wealth managers and other executives of institutions questioned, 92 per cent said they would boost their ESG data spend by more than 10 per cent in the coming year. About 20 per cent expect to raise their spend by 50 per cent.
Outside of the ESG data ecosystem, investment patterns also indicate that investors are sticking to their sustainability guns. Schroders’ Institutional Investor Study 2023 found that of the 770 respondents questioned worldwide 64 per cent said they believe sustainable investment is the route to boosting returns. Also, positive views of impact investing almost doubled to 59 per cent from 34 per cent the year before.
The reach of ESG investing is also growing, with FTSE Russell saying it’s decision to create more sustainable investment indexes in Asia is a response to rising demand.
Challenges
That’s not to say ESG investing is without its challenges. The Russell Investments survey also found that respondents said a key hindrance to integrating ESG was the data itself.
“They emphasised the hurdles posed by inadequate disclosures and insufficient standardisation of disclosure frameworks for companies, data providers, and rating agencies,” the report stated.
As RepRisk’s Alexandra Mihailescu Cichon told ESG Insight recently, the sustainable investment movement understands that it has a greenwashing problem and importantly, it recognises that data is the answer to solving the issue. These recent reports suggest that investors understand that too.
It’s fair to say, then, that ESG is far from dead. But it does need to take regular health checks.
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