Investors support ESG integration to combat greenwashing: CFA

December 17, 2021

ESG matters should be included in the analysis and investment selection process, according to a large majority of CFA Institute members.

The findings are part of the institute’s global member survey on ESG issues and the duty that investment managers have in the integration of ESG factors into investment analysis and decision making.

Almost half of members said that ESG factors should only be included if considered financially material to the investments.

According to the survey, just 31% felt ESG integration should be decided by the client in consultation with the investment manager.

Almost half said that the integration should not be mandated by government regulations, but 62% agreed that a global investment product disclosure standard would be beneficial to the industry, particularly when it comes to concerns about greenwashing.

“Uncovering investor viewpoints is critical at a time when global regulatory policy is in a state of flux concerning the role ESG factors play in the practice of investment management,” said Margaret Franklin, president and CEO of CFA Institute.

“Policymaker debates and regulatory changes are well underway on a variety of climate change and ESG topics around the world. Our members suggest these debates would be better settled between investors and their investment managers rather than regulators.”

The development of consistent and comparable ESG disclosures was supported by 78% of respondents, who said that they preferred sustainability reporting on a single global approach, or on a consistent global baseline.

The latter, the survey said, would allow for adaptations to be made for specific regions or markets.

The survey also highlighted a want for third party assurance of ESG data from companies, with 64% suggesting some level of auditor assurance should be required for sustainability reporting.

Matt Orsagh, director of capital markets policy at CFA Institute, said: “The findings from our survey shed light on the views of investors regarding key debates in the current maelstrom of ESG policy actions and will clearly help inform the global debate as regulatory initiatives evolve.”