Photos © Capital Group
Photo Fabian Wallmeier, Managing Director for Institutional Switzerland at Capital Group
Forty-six percent of institutional and wholesale investors in Switzerland Phtsay that a lack of robust data is holding back their organisations’ further adoption of ESG, according to a new global study by Capital Group, one of the largest and most experienced investment companies in the world, with assets under management of more than US$2.6 trillion.
Capital Group’s ESG Global Study 2021 surveyed 1,040 global institutional and wholesale investors, including pension funds, family offices and insurance companies, as well as fund of funds, retail/private banks and financial advisors, located across 16 different countries. The study seeks to identify the key drivers behind how these professional investors are integrating ESG into their operating models and where the challenges lie.
Access to ESG data is a key stumbling block for nearly a third (32%) of Swiss investors and more than a quarter (28%) of investors across Europe. More than half (55%) of Swiss investors said interpreting and analysing third-party ESG data is one of the greatest data challenges, compared to 45% of investors across Europe. Some 23% of Swiss investors cited the lack of consistency in ESG scores when incorporating ESG data, ratings and research into their investment decision-making process.
The study also reveals a belief in active engagement, with Swiss investors pointing to exercising voting rights (52%, vs. 44% in Europe) and collective engagement (54%, vs. 44% in Europe) as the most effective ways asset managers can engage investee companies on ESG.Some 48% of Swiss investors, and 44% across Europe, highlighted regular meetings and contact with senior executives and the board of investee companies as another effective route to engagement.
Like their European peers, Swiss investors said they allocate nearly half of their ESG focus to environmental factors (42%, vs. 45% in Europe). Regarding social issues, Swiss investors’ focus is relatively on par with their European counterparts (24%, vs. 26% in Europe), while governance considerations account for more than one third of Swiss investors’ ESG focus (34%, vs. 29% in Europe).
Marco Büchler, Managing Director, Financial Intermediaries Switzerland at Capital Group, explains: “ESG is an increasing area of focus for institutional and wholesale investors globally. While investors appreciate the importance of ESG integration – and qualitative analysis and engagement by active fund managers – they also report that the lack of robust and consistent data is the main challenge when investing in ESG.”
Fabian Wallmeier, Managing Director for Institutional Switzerland at Capital Group, adds: “More than a third (35%) of Swiss investors say greater transparency and consistency in ESG fund reporting frameworks would encourage their organisation to increase its ESG focus. Still, there is also a strong belief that these issues can be addressed through active management with an emphasis on fundamental research and analysis. It’s understandable that as ESG becomes more important to these investors, the desire to be rigorous in their assessment of ESG grows.”
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