Focus on impact investing continues to grow

Impact investing is now viewed among the key pillars of sustainable investing, alongside integration and positive screening, according to a Schroders institutional investor survey.

Schroders commissioned CoreData to conduct the sixth 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 sustainable investing and private assets.

Just under half (48%) of Australian institutional investors, as well as investors globally, said impact investing was their preferred approach to implementing sustainability, a significant increase on 27% a year ago and 25% in 2020.

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The study also found that the importance of full ESG integration into the investment process had grown as a focus, further cementing it as the most-favoured approach among investors.

Stephanie Hukins, sustainability investment director, Australia, said: “The findings of this year’s study demonstrate that institutional investors increasingly want to measure, manage and deliver impact. Whilst ESG integration within the investment process is the preferred approach to implementing sustainable investments, impact investing saw the most dramatic increase over the year, rising from 27% of investors to 48%.

“Interestingly, whilst regulatory and industry pressure remain important influences on Australian institutional investors, the desire to better align portfolios to corporate values, and at the same time positively impact society and the planet, have jumped ahead as the two leading reasons driving sustainable investments this year.”

The respondents, spanning 770 investors, represented a spectrum of institutions including corporate and public pension plans, insurance companies, official institutions, endowments and foundations, collectively responsible for US$27.5 trillion in assets. The research was carried out via an extensive global survey during March 2022.