Is Responsible Investing Near a Tipping Point in North America?

With environmental, social and governance (ESG) concerns becoming more pervasive among investors, Europe has taken an early lead in ESG adoption. But North America may not be far behind.

ESG investing may not be common in North America right now, but based on our recent ESG survey of more than 60 North American institutional asset allocators, it may be on the verge of joining the mainstream of investing.

Only 16% of respondents—professionals from retirement plans, endowments, foundations and gatekeepers encompassing roughly $500 billion in assets under management—said they currently have a specific ESG allocation. But when we asked them to consider the next one to three years, more than half of the respondents said that ESG considerations would become a bigger priority in manager selection.

GETTING READY TO FOLLOW IN EUROPE’S FOOTSTEPS

Those intentions are good news if North American investors are to catch up with their European counterparts. Europe leads the global market for ESG investing, with more than half the world’s ESG assets. That’s according to the Global Sustainable Investment Alliance (GSIA), an international collaboration of membership-based sustainable-investment organizations.