Each year, RBC Global Asset Management conducts a Responsible Investment Survey focusing on environmental, social, governance (ESG) and impact issues and opinions. In 2021, the company surveyed more than 800 investment-sector participants from around the world, with 45% representing organizations with $1 billion or more in assets.
According to the results, Europe continues to lead the world in ESG adoption, with 96% of European respondents saying they use ESG in their decision making. Canada ranked second at 81% — an eight percent decline from last year. Asia ranked third at 75% — a four percent increase from last year. The US trails the pack, as it has in the past, remaining in the 64% to 66% range for three consecutive years.
Overall, adoption of ESG principles remains at peak levels: 72% of global investors integrate ESG in their investment approach and decision-making. The investment community appears to have confidence in the financial viability of ESG: 83% of global investors said ESGintegrated portfolios are likely to do as well or better than non-ESG-integrated portfolios, about the same as last year.
The top ESG issue area cited by global investors was anti-corruption, followed by cyber security in second place and climate change in third place.
About one third of investors reported increasing their emphasis on ESG due to the coronavirus pandemic.
ESG investing is a type of responsible investing that looks to invest only in companies that have been assessed to score highly on environmental and social responsibility scales, as determined by third-parties. Criteria include:
- Carbon footprint.
- Supply chain sustainability.
- Racial diversity.
- LGBTQ+ equality.
- Executive pay.
- Leadership responsiveness to shareholders.
Other forms of responsible investing include:
- Socially responsible investing, which screens out undesired companies based on criteria set by each investor.
- Impact investing, which aims to produce a positive social or environmental impact via investing.
- Engagement, which seeks to influence corporate behavior through direct engagement, shareholder proposals, and proxy voting.