Critics of ESG investing and standards are nothing if not vocal. That can be a reminder that simply because someone is loud doesn’t mean they’re always worth paying attention to.
Professional investors aren’t shying away from this investing style because there’s vocal opposition to this investing style. That’s a positive for long-term adoption of exchange traded funds, including the Calvert US-Mid Cap Core Responsible Index ETF (CVMC), Calvert US Select Equity ETF (CVSE), Calvert Ultra-Short Investment Grade ETF (CVSB) and Calvert US Large-Cap Diversity, Equity and Inclusion Index ETF (CDEI).
A new survey of asset managers conducted by Cerulli Associates indicates that professional investors are likely to be more prudent in their approaches to this investing style. Yet they’re not outright abandoning environmental, social and governance principles.
“No asset managers polled expect to stop incorporating ESG considerations into investment decisions or offering ESG-focused and impact funds. Yet, 30% of managers will be more guarded about disclosing their ESG-related activities through websites, marketing materials, prospectuses, and other formal investment documents,” noted Cerulli’s Michele Giuditta.
More Positive Signs for ESG ETFs
It can be argued that it’s merely coincidence. But condemnation of environmental, social and governance investing seemed to increase alongside growth in the ETF landscape. Fortunately for these ETF issuers, data indicates a scant percentage of investors are being affected by this derision.
“The anti-ESG movement has deterred a small percentage (7%) of institutions from incorporating ESG considerations into investment decisions,” added Giuditta. “Top reasons cited are that they no longer believe in the merits of ESG and that responding to the anti-ESG backlash is time-consuming and costly.”
In what could be a long-term positive for ETFs such as CDEI and CVMC, and a potential highlight for active funds such as CVSB and CVSE, professional investors are taking the time to ensure these investment products live up to the billing and avoid greenwashing.
“Asset managers are more mindful of the changing environment. The ESG backlash has led many managers to adapt or enhance their client and prospect messaging to be more explicit. More than half (57%) of firms polled are creating communication pieces to address the misconceptions of ESG,” concluded Giuditta.
In other positive news, more than four in 10 asset managers polled by Cerulli are already using responsible investing products. And 35% said they plan to join that party over the next two years.
For more news, information, and analysis, visit the Responsible Investing Channel.