Climate change cited as leading ESG criteria for both money managers and institutional asset owners
HIGHLIGHTS
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Both money managers and institutional asset owners cited climate change/carbon emissions as the top issue they addressed in ESG incorporation, with each group saying it applied to more than $3 trillion of the assets under their purview.
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Additionally, money managers reported applying fossil fuel divestment policies across $1.2 trillion in their assets under management, putting it in fourth place among all the ESG criteria they address. Avoidance of military/weapons related investments and tobacco-related investments ranked second and third for money managers, affecting $1.8 trillion and $1.7 trillion in assets, respectively.
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For institutional asset owners, the second most important ESG issue factored into investment decision-making was avoidance of companies doing business in countries of high conflict risk, affecting $3.3 trillion in assets. Board issues and sustainable natural resources/agriculture were the third and fourth most important ESG issues for institutional investors in asset-weighted terms, affecting $2.9 trillion and $2.8 trillion, respectively.
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From 2020 through the first half of 2022, 154 institutional investors and 70 investment managers controlling $3 trillion in AUM led or co-led shareholder resolutions on ESG issues.
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The leading ESG issue raised in shareholder proposals was on ensuring fair workplace practices, and particularly on ending de facto discrimination based on ethnicity and sex. Close behind in the numbers of proposals filed were concerns about corporate political activity and climate change.
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Community investing experienced rapid growth, with assets under management increasing 72 percent to $458 billion over the past two years and increasing more than 600 percent in the last decade.