New research from fixed income ETF provider Tabula Investment Management Limited reveals growing desire for funds to have an ESG rating from an independent rating agency.
77% of survey recipients interviewed identified an ESG rating as fundamental in their investment decision making, compared to just 10% of survey participants nine months prior. Meanwhile, just 24% of investors were concerned about a fund manager's stewardship record when selecting investment funds.
100 professional investors across the UK, Sweden, Switzerland, Denmark, Norway, Italy, Germany and France were interviewed in February 2021.
"This year, ESG criteria in funds will shift from being one of the many factors to consider to being a key theme in all investments, and the recent introduction of the SFDR will help accelerate this", said Tabula CEO, Michael John Lytle.
This year, ESG criteria in funds will shift from being one of the many factors to consider to being a key theme in all investments."
When asked which ESG themes are most important in investment selection, survey participants showed a clear preference for ESG themes that have impact, such as climate change (41% of respondents), over "DNSH" investments which "do no significant harm" (11% of respondents).
There was also a desire to make a positive impact (or reduce a negative one) is the key reason for selecting ESG investments.
When asked to pick the reasons for selecting ESG investments, 70% of European institutional investors and wealth managers cited a desire to make a positive impact. This was followed by the need to comply with investment policies or guidelines, which was cited by 67% of survey respondents.