Majority Consider ESG Issues

The discourse on ESG issues is based on the premise that these issues, particularly the environmental and social issues, do not receive sufficient consideration in investment decision making. A number of reasons are offered to explain why this is the case. Three stand out:

It is difficult to assign a monetary value to ESG issues and to integrate them into quantitative models

. ESG-related disclosure by companies may be limited, unverified, and nonstandardized.

ESG issues tend to influence financial performance in the long term whereas many investors, as suggested earlier, have relatively short-term horizons. Despite these challenges, consideration of ESG factors is becoming more common. Evidence points to a growing awareness of ESG issues in investing. In our survey, only 27% of respondents said that they do not consider ESG issues. Thus, 73% consider at least environmental, social, or governance issues, or combinations thereof, in investment decisions (Figure 1).

Figure 1. ESG Issues Considered 27% 50% 49% 64% Governance Environmental Social I do not take ESG factors into consideration Which, if any, of the following ESG issues do you take into account in your investment analysis or decisions?

Which, if any, of the following ESG issues do you take into account in your investment analysis or decisions