More and more U.S. money managers are incorporating environmental, social and governance factors into their investment analysis and portfolio construction, according to US SIF: The Forum for Sustainable and Responsible Investment.
They are primarily driven by the demand for ESG investing products from institutional and individual investors and by their own mission and values.
US SIF recently assessed 16 big firms that practice ESG integration, the systematic and explicit inclusion by investment managers of ESG risks and opportunities into traditional financial analysis.
Researchers found that half of these managers either did not inform investors of their criteria, or did so only partially.
The report said the 16 surveyed money managers were the largest that practiced ESG integration in the U.S. Collectively they represented more than $3 trillion in total assets under management at the end of 2014, of which between $1.3 trillion and $2.7 trillion was subject to ESG integration.
These assets, in turn, were a significant portion of the $4.7 trillion in ESG integration assets under management that US SIF identified in its 2014 biennial survey of sustainable, responsible and impact investing in the U.S.
According to the report, the assets of the eight money managers who did not or only partially disclosed the ESG criteria they considered represented some 60% of the total ESG assets of the money managers surveyed.
“While we are heartened by the growth of ESG integration, we believe money managers must provide greater disclosure about how they implement these strategies,” Lisa Woll, chief executive of US SIF and the US SIF Foundation, said in a statement.
“Obtaining information about the ESG criteria money managers consider in investment analysis is critical for investors to understand the impacts of ESG integration on their portfolios, as well as on the companies assessed and society at large.”