Just under half (45 per cent) of asset managers, pension funds and insurers still do not have ESG investment policies in place, according to new research from Clearwater Analytics (CWAN).
CWAN outlined these findings in a survey which asked more than 190 institutional investment firms about their ESG investment policies.
The findings were published in the same week that HSBC’s asset management division suspended its global head of responsible investment for stating that “climate change is not a risk we need to worry about”.
CWAN found that those who did not have a clear strategy pointed the finger at the lack of available and credible data to evaluate investments on an ESG basis, compared with just 16.5 per cent who blamed lower returns.
Market participants feel private equity and debt assets are “behind the times” from a data perspective,with 80 per cent reporting ESG market data for private equity investments deeming it to be either inadequate or lacking, while 79 per cent echoed this sentiment for private debt.
This is in contrast to under half of respondents who report it as an issue when investing in public equities – with this disparity exposing the difficulty that investors have when attempting to measure the ESG impact of private market assets, says CWAN.
Respondents also say that they were behind the times operationally when managing their ESG data – with more than 40 per cent stating that they still use spreadsheets for reporting, despite half needing to report on responsible investing on a quarterly basis.
Commenting on the findings, Gayatri Raman, president of Europe and Asia at CWAN, says: “The prevailing view of the last few years has been that ESG is a fundamental pillar of modern investing. This study shows that this is not strictly speaking true – and a major barrier is the lack of credible data, particularly in private markets.
She adds: “Before anyone can incorporate ESG factors into their investing strategies, data needs to be highly available, high quality, and easy to track. Only then will investors be able to fully integrate these initiatives into their investment process.”
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