Global ESG Survey 2023

The ESG Global Survey 2023 was commissioned to gather the views of asset owners, asset managers, hedge funds, and private capital firms on certain ESG topics. CoreData Research administered an extensive online survey that includes a sample of 180 asset owners 180 asset managers, and 60 hedge funds & private capital firms. The data was collected from 15 countries throughout Europe (50%), Asia Pacific (28.6%) and North America (21.4%). This is a summary of the study’s results.

Key findings of BNP Paribas’s ESG Global Survey 2023 include:

• Commitment towards net zero is accelerating: 41% of respondents say it is a priority for their organisation now, and that figure will grow to 48% within the next 2 years.
• Impact investing is increasing in importance: 54% expect to use it in the next two years (vs. 45% now). Impact investing is set to become the most popular ESG approach globally.
• Active ownership will play a key role: 45% say it will be a key ESG objective within the next 2 years.
• Regulation and reputational risks are major drivers. Respondents say their organisation is primarily assessing the financial materiality: regulation risks at 60%, reputational risks at 58%
• Data quality remains the biggest barrier to ESG investing: 71% see inconsistent and incomplete ESG data as a significant barrier to the greater adoption of ESG
• ESG expertise integrated into investment-related operations: 51% say their organisation is integrating ESG expertise and data into portfolio management / investment decisions.

Executive summary

1/ Sustainable investing to focus on positive impacts

Impact investing is increasing in importance: we see an increase in the future in the use of impact investing, as investors seek to make a measurable, positive impact with their investments. It is becoming more important as a key ESG objective and as a method of ESG investing and is one of the top two elements in defining a sustainable investment.

Active ownership a key ESG objective with multiple targets Currently, active ownership is a key ESG objective for investors. But over the next few years, its key engagement goals will broaden from climate change and decarbonisation, the priority for many now, to a wider mix of environmental, social and governance topics.

Private market assets increasingly incorporate ESG criteria Private equity and private debt, along with equities and fixed income, are now the asset classes most likely to have ESG criteria incorporated into investments. This ties into the growing importance of impact investing, as investors may have more scope to have a positive impact through private market investments than in other asset classes.

Giving asset managers carbon reduction targets is on the up We find that in two years’ time, over 80% of investors will have imposed carbon reduction targets on their external asset managers. At present, investors do this through soft targets, as opposed to hard targets, by a ratio of 4 to 1.

2/ ESG data and reporting and its challenges

ESG data remains an obstacle for investors: investors see inconsistent and incomplete data as a key barrier to greater adoption of ESG investing, along with its cost and poor quality. To get around this, investors use multiple data sources and ensure the transparency of raw data among other methods.

Generalists and specialists are used for ESG data Many investors use both generalist and specialist ESG data vendors, with the latter widely used in relation to UN Sustainable Development Goals (SDGs), the most popular external framework for sustainable investing, while a mix of data vendors is most often used for alternatives.

ESG reporting is often integrated into financial reporting We find that the most popular method of reporting ESG data is to integrate it into existing financial reporting, with over a third of investors doing so. The next most widely used formats and approaches are to present raw ESG data, then dynamic data visualisation and static reports.

3/ Operating models: investors on banking partners

Areas where investors would pick a banking partner: we find that structured ESG products is the area where investors are most likely to use a banking partner or provider, followed by facilitating access to raw ESG data. Independent monitoring of ESG guidelines, data management services and portfolio risk management are also areas where investors may use a banking partner or provider.

Criteria for selecting a banking partner or provider: nearly half of investors say that the transparency of data methodology is the most important criteria for selecting a banking partner or provider, followed by brand reputation on ESG and providing leading ESG skills and expertise.

Integrating ESG expertise into investment-related operations: investors are most likely to have integrated ESG expertise and data into portfolio management and investment decisions, followed by risk management and monitoring. And over a third have integrated ESG expertise and data into monitoring ESG rule compliance, strategic asset allocation and asset and investment selection.