Why and How Investors Use ESG Information: Evidence from a Global Survey

TLDR

The study surveys mainstream investment organizations to understand why and how they use ESG information. Investors cite relevance to performance, client demand, product strategy, and ethics as primary motivations for using ESG data, yet inconsistent reporting standards hinder use; negative screening is viewed as least beneficial, whereas full integration and engagement are considered most advantageous.

Abstract

Using survey data from mainstream investment organizations, we provide insights into why and how investors use reported environmental, social, and governance (ESG) information. Relevance to investment performance is the most frequent motivation, followed by client demand, product strategy, and then, ethical considerations. An important impediment to the use of ESG information is the lack of reporting standards. Among the various ESG investment styles, negative screening is perceived to be the least beneficial to investments and is driven by product and ethical considerations. Full integration and engagement are considered more beneficial and are driven by relevance to investment performance.