To gain deeper insights into how investors are implementing ESG in their portfolios and the challenges they face, State Street Global Advisors commissioned a survey of 475 global institutional investors in the United States, Europe and Asia Pacific, including some of the largest pension plans, endowments and foundations. Respondents are directly involved in or influence asset allocation decisions. The findings were supplemented by a series of in-depth interviews with senior institutional investment professionals.

The results confirm that overall adoption of ESG investing is high: the vast majority of investors have some exposure to ESG factors in their portfolios. Furthermore, institutions are highly satisfied with the performance of their ESG investments. Indeed, the extent of satisfaction among those investing in ESG is encouragingly strong.

Yet, while the survey finds that ESG investments are a feature of many institutional portfolios, the depth of exposure is low for all but a small group of investors, despite long-term performance potential. ESG encompasses only a third of investments on average. We uncovered a range of challenges that can inhibit investors’ capacity to embrace ESG investing more fully.

Issues around metrics and a lack of standardized performance measures can lead to confusing and contradictory results and prove particularly concerning.

Other difficulties include the lack of internal capabilities, internal and external stakeholder misalignment with ESG objectives and concerns over costs.

Read the full report here