Business

BlackRock, the world’s largest asset manager, with $7.81 trillion in assets under management as of end-Q4 2020 has prepared a report and surveyed:

425 investors from
27 countries together having
25$ trillion under asset management

These are big players comprised of national and corporate pension funds, insurance companies, asset managers, banks, organisations and institutions.

Six overall trends dominate

1 Sustainable investments (ESG) are growing in scale

More than 54% of the respondents “consider sustainable investing
to be fundamental to investment processes and outcomes.”

2 Shift in type of investments

“Respondents plan to double their sustainable assets under
management in the next five years – rising from 18% of assets
under management on average today to 37% on average by 2025.”

3 Data credibility and transparency

“53% of global respondents cited the poor quality or availability of
Environmental, Social, and Governance (ESG) data and analytics as
the biggest barrier to deeper or broader implementation of sustainable
investing, higher than any other barrier that we tested. This was
consistent across all regions.”

4 Climate, SDGs & ESG

“88% of global respondents ranked Environment as the priority most in focus amongst those choices today, reflecting the urgency that is presented by climate change. Furthermore, the Sustainable Development Goals (SDGs) and Paris Accord both offer goal-oriented frameworks to which investors are already aiming. While adoption of these frameworks is currently low,
respondents expect adoption to increase.”

The image above shows the percentage of respondents that currently or plan to work on these SDG goals according to the BlackRock Sustainable Investment Survey 2020.

5 Integrating ESG in the portfolio

ESG integration seems to be the most popular approach to sustainable
investing.
“75% of global respondents currently, or considering, integrating ESG into their investment decisions, followed by 65% of respondents who utilize, or who would consider utilizing, exclusionary screens as a key mechanism for expressing their sustainability principles.”

6 Fixed income and alternatives set to grow

Responses show that indexing is set to play a more significant role
in the future, particularly within EMEA, with growing focus on fixed
income indexing
.

3-5 year focus on sustainable investments

The survey also asked the respondents to “Rank the focus of your sustainable investment activity to date. And please rank the likely focus of your sustainable investment activity over the next 3-5 years.”

The response shows a clear focus on environmental investments because there great focus on these due to climate talks, as well as a good return on investment.

Illustration from BlackRocks 2020 Sustainable Investment Survey, page 29

Take a look at the highly informative BlackRock Sustainability Survey

Conclusion

Many of the world’s most influencial investors and capital asset managers are moving their focus towards investing in assets that are incorporating a triple bottom line approach: People, Planet and Profit.

Governance, disclosure and transparency are also values that resonate with the investors, who want to secure their assets long term in a stable manner.

And if the large investors are viewing their options through the sustainable development glasses, then chances are the rest of the worlds investors and organisations will follow their example and leadership.