CFA Institute and PRI publish new report on ESG integration in EMEA
CFA Institute and the Principles for Responsible Investment (PRI), an investor initiative established in 2006 in partnership with UN agencies, have reviewed the state of ESG integration in the investment process.
While the report on ESG Integration in the Americas was published last year, the results for EMEA were presented today. The new report ESG Integration in Europe, The Middle East and Africa: Markets, Practices and Data highlights the heterogeneity of ESG integration practices in eight major markets, including Germany, France, Switzerland, the United Kingdom, South Africa and the Arabian Gulf Region.
The reports’ main findings include the following points:
- There is no “one best way” to do ESG integration and no “silver bullet” to ESG integration.
- Governance is the ESG factor most investors are integrating into their process.
- Environmental and social factors are gaining acceptance, but from a low base.
- ESG integration is farther along in the equity world than in fixed income.
- Portfolio managers and analysts are more frequently integrating ESG into the investment process, but rarely adjusting their models based on ESG data.
- The main drivers of ESG integration are risk management and client demand.
- The main barriers to ESG integration are a limited understanding of ESG issues and a lack of comparable ESG data.
- Investors acknowledge that ESG data have come a long way, but advances in quality and comparability of data still have a long way to go.
- It would be helpful for issuers and investors to agree upon a single ESG reporting standard that could streamline the data collection process and produce more quality data.
- Many survey participants were concerned that ESG mutual funds and ETFs offered to investors may be driven by marketing decisions and may not be true ESG investment products.