ESG is the latest new and shiny thing for many in the PR community, but growth may be hampered by poor data and measurement, according to a survey by Blackrock.
There has been an explosion of environmental, social and governance data over the last decade. The Governance & Accountability Institute found that 90 percent of the S&P reported ESG metrics in 2019 vs. 20 percent in 2011.
Much of that data does not amount to too much.
In its survey of institutional investors, Blackrock found that more than half (53 percent) of respondents cited lackluster data and analytics as the No. 1 barrier to deeper or broader implementation of sustainable investing.
Poor sustainability reporting (33 percent) ranked next, followed by not enough products available which match sustainability goals (31 percent), unsure of its ability to generate persistent returns (29 percent), internal resourcing constraints (22 percent), lack of knowledge on how to implement (17 percent) and no corporate policy or top-down initiative (17 percent).
The Blackrock respondents bemoaned the lack of standardization of ESG data and doubt that sustainable investments can generate consistent reforms.
The private equity firm surveyed 425 institutional investors who managed $25T in assets.
Despite concerns over ESG data, Blackrock believes sustainability is here to stay.
More than half (54 percent) of the respondents consider sustainable investing to be “fundamental to investment processes and outcomes.”
EMEA investors are most bullish on sustainability, as 86 percent of them consider it to be central to their strategies.
That compares to 57 percent in the APAC countries and 47 percent in the Americas.
The respondents plan to double their sustainable assets under management over the next five years—rising from 18 percent of assets to 37 percent.
The COVID-19 pandemic has had negligible impact on sustainability plans. Only three percent of respondents plan to delay the implementation of sustainable investment due to COVID-19.
The “E” part of ESG is ready to shine due to COVID-19 and concerns over climate change, according to a report by Japan’s Nomura Securities.
The collapse of oil prices due to the COVID-19-driven economic slump has investors scrambling for higher returns on investments.
Nomura reports the economic crisis will invariably influence people to minimize risk. Renewable energy projects function as fixed income alternatives, with reliable, steady cash flows and represent safe harbor investments in periods of market volatility.
The firm believes market forces driving sustainable finance will accelerate because the COVID-19 crisis makes it clear that all people live on one planet in a deeply interconnected way.
“Climate change, loss of biodiversity, industrial agriculture, deforestation harm us all. There is no place on the planet to run to, just as there is no place to avoid the health and economic consequences of COVID-19,” according to Nomura’s report.
PR firms that focus on the “E” in ESG will enjoy excellent returns.