Lack of innovation in ESG products and services: this is what global investors complain in the second edition of the Capital Group’s global ESG study, which surveyed 1,130 institutional and wholesale investors, including pension funds, family offices and insurance companies, as well as funds of funds, retail / private banks and financial advisors, located in 19 markets around the world in 2022.
The gaps and strengths of the ESG universe according to global investors
The survey shows that according to investors there are not enough funds offering a broad spectrum of themes capable of embracing the entire ESG universe; they want more innovative products and recognize the need to invest in transition companies (companies that are looking to transform their business models more sustainably).
According to the Capital Group study, there is a gap between investor demand and the availability of funds that offer exposure to multiple themes. Nearly four in 10 global investors (39%) believe that lack of product innovation is holding back increased ESG adoption. Nearly half (46%) of global investors also believe that there are not enough funds aligned with the United Nations Sustainable Development Goals (SDGs).
47% also believe that existing funds targeting SDGs focus excessively on environmental issues and 43% say there is a specific need for multi-themed ESG funds.
Investors interviewed are increasingly aware that a sustainable future cannot be achieved just by supporting companies considered ESG leaders. Four in 10 investors (40%) are currently in favor of investing in a combination of leading ESG companies and companies in ESG transition, while a third (34%) believe that wealth managers who invest exclusively in leading ESG companies at the expense of those in ESG transition. in transition they are doing more harm than good. The percentage of investors who plan to focus primarily or exclusively on ESG entities in transition is expected to rise from the current 21% to 30% over the next two to three years. The survey revealed that European investors are the ones who will focus the most on those in transition: European investors have said they want to increase allocations from the current 20% to 34% over the next two to three years.