Money Managers and the Growth of ESG Investing

Jan 13, 2021 9:15 AM ET

The US SIF Foundation in its new SRI Trends Report identified 384 money managers and 1,204 community investing institutions incorporating ESG criteria into their investment analysis and decision-making processes. The $16.6 trillion in ESG incorporation assets they represent is a nearly 43 percent increase over the $11.6 trillion in such assets identified in 2018.

In terms of assets, money managers incorporate ESG factors fairly evenly across environmental, social and governance categories:.

Overall, in asset-weighted terms, money managers incorporated social factors slightly more than environmental and governance criteria. Social criteria incorporation by money managers increased 49 percent from 2018 to $16.1 trillion.

Environmental criteria as a whole grew faster than social or governance factors over the past two years, increasing 57 percent, from $10.1 trillion to nearly $16.0 trillion.

Among all specific ESG criteria, governance factors related to executive pay saw the greatest growth, increasing 122 percent since 2018 to $2.2 trillion, as shown in Figure E. 

However, climate change remains the most important specific ESG issue considered by money managers in asset weighted terms. The assets to which this criterion applies increased 39 percent from 2018 to 2020 to $4.2 trillion,

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