Senior investors and executives are increasingly eager to prioritize Environmental, Social, and Governance (ESG) investments, according to a recent survey conducted by Bloomberg Intelligence (BI). The survey, titled ESG Market Navigator, included responses from 250 C-suite executives and 250 senior investors across North America, Europe, and Asia Pacific.
The survey revealed that both investors and executives expect a range of benefits from a stronger focus on ESG. A staggering 90% of investors anticipate enhanced returns, while executives foresee improved access to capital and bolstered corporate reputation.
Despite concerns regarding greenwashing scrutiny, approximately three-quarters of executives stated that the benefits of ESG outweigh any potential risks. In fact, 54% of investors reported that political pushback on ESG in the U.S. has led them to prioritize ESG even more than before. An additional 31% indicated that it has had no impact on their ESG strategy. The survey results also indicate that ESG has become mainstream, with 90% of investors and 67% of executives acknowledging its widespread adoption.
Notably, there were some differences in how investors and executives ranked the long-term benefits of ESG. For investors, 63% considered profit and returns as one of the top three benefits, while executives more frequently selected brand value (66%).
The survey demonstrated that investors increasingly view ESG as part of their fiduciary duty, with 86% affirming its role as a responsible investment strategy. Moreover, a substantial majority (90%) of investors believed that ESG investments would deliver superior returns, while 92% recognized the importance of ESG in creating a more resilient portfolio. Additionally, 89% of respondents highlighted the value of ESG analysis in making well-informed investment decisions. These positive perceptions have prompted most investors to increase their investments in ESG, with 86% planning to expand their assets under management (AUM) towards ESG, and 88% planning to do the same for climate-focused investments within the next two years. Furthermore, 25% of investors anticipate allocating over 30% of their portfolios to ESG within five years.
To support their increased focus on ESG, investors also expressed intentions to allocate more resources to ESG research. Approximately 85% of investors plan to boost their ESG research budgets over the next two years, with nearly a quarter expecting an increase of over 20%.
Investors are also becoming more proactive in engaging with companies on ESG issues. Over 60% of investors reported challenging corporates on their ESG strategies, while 84% observed a heightened emphasis on ESG during investor calls.
Executives also expressed plans for greater ESG investments in the near future. The survey indicated that 77% of executives anticipate larger ESG budgets within the next two years, including 23% expecting an increase of over 20%. Executives cited a diverse range of benefits associated with ESG, such as shaping a more robust corporate strategy (84%), concerns about losing market share without adequate ESG focus (81%), and improved access to capital through an ESG strategy (76%).
The survey found that 84% of executives incorporate ESG and climate factors into their corporate planning and strategies. However, while 57% of executives expect their organizations to achieve their net-zero targets, only 33% expressed the same level of confidence in their peers.
Looking ahead, one of the key trends identified by investors and executives alike is the impact of artificial intelligence (AI) on ESG. More than 90% of respondents agreed that AI can complement ESG initiatives by addressing data challenges. Improved data estimation, enhanced supply chain traceability, and more effective controversy tracking were cited as the top benefits of AI in the ESG space.
According to Adeline Diab, Global ESG Research and Strategy Director at Bloomberg Intelligence, the survey results demonstrate a sustained and growing interest in ESG among senior investors and executives. Both groups anticipate numerous advantages, such as enhanced returns, improved access to capital, and better corporate reputation. The trend towards greater ESG focus remains strong, despite occasional pushback, and investors are increasingly considering ESG as a crucial aspect of their fiduciary duty.