Schroder's

Sustainability

Institutional Investor Study
2020

Schroders’ annual Institutional Investor Study analyses the investment perspectives of 650 institutional investors, collectively responsible for $25.9 trillion in assets and from 26 locations across the world. The research was conducted in April 2020, as the scale and global impact of the Covid-19 crisis had taken hold.

Institutional investors’ attitudes to sustainability:

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This year, institutional investors’ preferences have shifted from exclusive to inclusive approaches as ESG integration is highlighted as their favoured investment approach. There is also a strong focus on active ownership and positive screening.

2019 2020

ESG integration

Positive screening

Active company engagement and stewardship

Thematic investing

Negative screening

Impact investing

ESG integration into the investment process
Positive screening
Active company engagement and stewardship
Thematic investing
Negative screening
Impact investing

2019

2020

Alignment with corporate / internal values and pressure from regulators are driving the sustainability investment focus for global institutional investors.

Pie chart for Covid-19 impact on business

58%

Aligning to corporate / internal values

49%

Regulator and industry pressure

35%

Potential for higher returns and lower risk

33%

Member pressure

19%

Education & awareness from asset managers

14%

Education & awareness from investment consultants

Institutional investors identified the following key criteria as “successful” engagement, i.e. influencing companies to make sustainable changes.

Transparent reporting

Evidencing a tangible outcome

Consistently voting against companies to drive change

Withdraw / exclude investments from these companies

Institutional investors focus on a wide variety of areas when it comes to engaging on sustainable issues, but attention to environmental issues and corporate strategy continue to be the leading engagement strategies.

Attention to environmental issues

51%

54%

58%

Corporate strategy

54%

53%

58%

Accounting quality

38%

41%

40%

Human rights

26%

Supply chain management

14%

24%

Diversity

29%

33%

23%

While the uptake of sustainable investing continues to grow, 70% of global investors still consider investing sustainably to be a challenge.

2018

2019

2020

% challenging

Not challenging

Greenwashing, due to a lack of clear, agreed definitions on what sustainable investment is, has been highlighted as the biggest challenge to investing sustainably.

2018

2019

2020

Greenwashing

Lack of transparency and reported data

Performance concerns

Difficulty measuring and managing risk

Cost

Performance data and greater transparency have been consistently highlighted as crucial for successful adoption of sustainable investments in the long term.

- 2018
- 2019
- 2020
Data/evidence that shows investing sustainably delivers better returns
- %
- %
- %
Greater transparency by companies on both financial and non-financial perofmance reporting
- %
- %
- %
More providers and benchmarks offering sustainable data
- %
- %
- %
Industry wide accreditation
- %
More sustainable investment options e.g. impact investing
- %
- %
- %
More training
- %
- %
- %
Greater support from senior leadership
- %
- %
- %

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Investment Outlook Private Assets

Schroders commissioned CoreData to conduct the fourth annual Institutional Investor Study to analyse the world’s largest investors’ key areas of focus and concern including the macroeconomic and geopolitical climate, return expectations, asset allocation and attitudes to private assets and sustainable investing. The respondent pool represents a broad spectrum of institutions, including pension funds, insurance companies, sovereign wealth funds, endowments and foundations owning approximately $25.9 trillion in assets. The 650 respondents were spilt as follows: 179 in North America, 248 in Europe and South Africa, 173 in Asia-Pacific and 50 in Latin America.

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Schroder Investment Management North America Inc. (“SIMNA”) is an SEC registered investment adviser providing asset management products and services to clients in the US and Canada. SIMNA is an indirect wholly owned subsidiary of Schroders plc, a UK public company with shares listed on the London Stock Exchange, and is an SEC registered investment adviser providing asset management products and services to clients in the US and Canada. Schroder Fund Advisors LLC (“SFA”) is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and markets certain investment vehicles for which SIMNA Inc. is an investment adviser. The Schroder mutual funds (the “Funds”) are distributed by SEI Investments Distribution Co (“SIDCO”), a member of FINRA. SFA previously served as the distributor of the Funds. Although SFA has been replaced by SIDCO as the distributor of the Funds, SFA continues to be involved in the distribution of shares of the Funds through an agreement with SIDCO, and SFA, SIMNA and their affiliates continue to provide shareholder services to the Funds. SIDCO is not an affiliate of Schroders plc.

Schroder Adveq Management US Inc. (“Schroder Adveq US” or “Schroder Adveq” herein) is registered as an investment adviser with the SEC. It provides asset management products and services to clients in the United States and Canada. Schroder Fund Advisors LLC (“SFA”) markets certain investment vehicles for which Schroder Adveq US is an investment adviser. SFA is an affiliate of Schroder Adveq US and is registered as a limited purpose broker-dealer with the Financial Industry Regulatory Authority. Schroder Adveq US is an indirect, wholly-owned subsidiary of Schroders plc. For more information, visit www.schroderadveq.com

Schroder Secquaero (formerly Secquaero Advisors AG) is a Zurich-based, wholly owned subsidiary of Schroders plc, and provides non-discretionary advice to certain strategies, including Insurance-linked securities, marketed in North America.

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Sustainability

Institutional Investor Study
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This year, institutional investors’ preferences have shifted from exclusive to inclusive approaches as ESG integration is highlighted as their favoured investment approach. There is also a strong focus on active ownership and positive screening.

Institutional investors identified the following key criteria as “successful” engagement, i.e. influencing companies to make sustainable changes.

While the uptake of sustainable investing continues to grow, 70% of global investors still consider investing sustainably to be a challenge.

Greenwashing, due to a lack of clear, agreed definitions on what sustainable investment is, has been highlighted as the biggest challenge to investing sustainably.

Related Insights

Contact Schroders

Select a region

Select a location

Select a site

Retail Investors

Retirement Services

Mutual fund investment

Private Investor

Real Estate

Asset management

Wealth management

Select a region

Select a location

Select a site

Retail Investors

Retirement Services

Mutual fund investment

Private Investor

Real Estate

Asset management

Wealth management

Schroders in the US

Schroders Globally

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Is Suga’s race run as Japan’s premier?

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Sustainability

Institutional Investor Study 2020

This year, institutional investors’ preferences have shifted from exclusive to inclusive approaches as ESG integration is highlighted as their favoured investment approach. There is also a strong focus on active ownership and positive screening.

Institutional investors identified the following key criteria as “successful” engagement, i.e. influencing companies to make sustainable changes.

While the uptake of sustainable investing continues to grow, 70% of global investors still consider investing sustainably to be a challenge.

Greenwashing, due to a lack of clear, agreed definitions on what sustainable investment is, has been highlighted as the biggest challenge to investing sustainably.

Related Insights

Contact Schroders

Institutional Investor Study
2020