How investors really view sustainability

47% of responses came from outside North America, allowing us to report with a global and regional lens. Overall, priorities are similar around the world, as environmental and social concerns were often given as reasons to start a sustainable investing program.

Interestingly, many also said improved long-term investment results also influenced their program development.

Well over half of allocators and their advisors assess the ESG risk factor frameworks of asset managers during due diligence. For those GPs struggling to fundraise, it would be a shame to alienate so many prospects with little to nothing to offer in this space.

We were able to isolate the views of VCs in this edition, allowing us to find that compared to non-VC GPs, VCs were less likely to select environmental concerns for the sustainable investment programs, but more likely to be interested in improving employee engagement and recruitment.

Respondents from all geographies and types were clear that the top challenges facing sustainable investing are defining and measuring impact outcomes, the lack of robust data on ESG factors for private companies, and difficulty benchmarking nonfinancial goals.

The industry is slowly converging on standards and frameworks for this space, but it will still take some time before everyone is marching to the same beat.

And finally, for those concerned that this is a touchy-feely exercise where sustainably-minded investors are sacrificing financial returns in their pursuit of values-based goals, our investors ranked the importance of performance versus sustainability on a sliding scale (see the chart below).

 

Click for a larger version: performance vs. sustainability