How far along is your ESG journey, asks Nuveen

This article is sponsored by Nuveen

This article is sponsored by Nuveen

Author: Amy O’Brien, head of responsible investment, Nuveen

From climate risk to social inequality, different investors around the world are grappling with the same global issues in different ways. This was evident in Nuveen’s recent EQuilibrium survey of institutional investors.

It highlighted the different stages institutional investors are at on their journey to incorporate environmental, social and governance issues into investment practices and outcomes. And it found that among all categories of institutional investors surveyed, insurers were leading the way on ESG.

Insurers at the front

A key finding from the survey was that insurance companies globally had the highest average scores compared with corporate and public pensions across all responsible investing categories.

While 79 percent of all asset owners indicated they were currently addressing climate risk in their portfolios or planning to do so in the next two years, it was 90 percent for insurance companies. Honing in on net-zero carbon targets, 87 percent and 84 percent of EMEA and APAC insurers, respectively, indicated they were already making this commitment or planning to within a two-year time frame.

While it may not surprise that insurance companies showed greater sensitivity to and more action on climate risk, we were not expecting them to also show the strongest commitment in other aspects of responsible investing, namely social investing and diversity, equity, and inclusion.

They revealed a greater appetite for social investments, with 64 percent investing in them or planning to compared with 49 percent of all asset owners. Insurers were also more likely to believe that investors can impact social inequalities through investment choices (61 percent vs. an average of 51 percent) and consider DE&I in the investment manager decision (68 percent vs. an average of 54 percent)

Plot your organisation’s ESG journey

With the results of our EQuilibrium survey, we created a short 14-question survey that allows institutional investors to see where they are on their ESG journey relative to peers across four categories.

ESG integration considers the tactics and milestones, such as establishing ESG objectives and implementation strategies. The original survey found that the overwhelming majority of asset owners (87 percent) said they either currently or are planning to incorporate ESG factors into their investment decisions.

Climate risk looks at how organisations are prioritising investment risk and the transition to a carbon-neutral economy. While 80 percent said that, over the next two years, they will still be defining their climate investment objectives and roadmap, 43 percent said that their organisation was already addressing climate risk in portfolios.

Social investing explores the S of ESG and investing activities aligned to social impact objectives. These range from specific outcomes, such as providing affordable housing, to creating positive social impact, such as investing in companies with diverse leadership targets.

The final section asks about the organisation’s practical approach to DE&I issues.

By taking the three-minute abridged version of the survey, you can create a report that shows where your organisation is on its ESG journey and how it stacks up against your fellow investors. It also provides access to relevant insights and guidance for your stage of the journey and future action.

Compare your journey with peers

Graphic for illustration purposes only. Source: Nuveen

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To develop the journey tool, we analysed the answer patterns of the 700 global institutional investors who participated in the Nuveen EQuilibrium study. The Nuveen EQuilibrium survey examined the views and practices of 800 global investors and consultants spanning North America, Europe, the Middle East and the Asia Pacific region. It included decision makers at corporate pensions, insurance companies, endowments and foundations, sovereign wealth funds and other entities, all with assets of a least $500 million.