2022 Europe, Asia, North America ESG
Research - Results

April 4, 2023
Seiji Ishii
Head of Japan, Coalition Greenwich

Global

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Contents
Objectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

2

GlobalObjectives and Methodology

Results are based on 305 telephone interviews with key investment decision makers at large institutional
investors across North America, Europe, and Asia.
Interviews took place from June through August of 2022.
Participant Composition
Plan Type

RegionPlan Size

3%
8%
4%
4%

10%

Corporate DB/DC

27%

14%

Public Sector DB

7%

19%

33%

Insurance

13%

17%
16%

25%

16%

Endowment/Foundation

41%

Collective Pension

42%

Commercial Bank<$499M
Asset/Fund Manager$500M - $999M

Union/Multi-Employer$1B - $9.9B

Other$10B - $49.9B$50B+*Other includes Religious Institution, Sparkasse, and Sovereign Wealth Fund.
S2. Which of the following best describes your institution type? (Base: 305)
S1. Which of the following ranges represents your institution’s total assets under management? (Base: 305)

3

NA

EU

Asia

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Coalition Greenwich conducted its fifth market study with institutional investors examining their preferences,perspectives, and future plans for employing ESG.

GlobalObjectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

4

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Contents

GlobalUtilization of ESG in Institutional Portfolios

Current
ESG Use

No,
25%

No,
47%

No,
8%

No,
24%

Global

NA

EU

Asia

Yes, 75%

Yes, 53%

Yes, 92%

10%

Yes, 76%

9%

8%

17%

9%

15%

ESG
Utilization

Global

15%
56%

19%

NA
61%

23%

26%

EU

43%

Asia

60%

7%
22%

ESG is integrated into our investment philosophy
We have an allocation to a discrete ESG mandate(s) / fund(s)We seek out and put into action ESG strategies where appropriate
Other

Q1. Do you currently employ ESG in your portfolio? (Base: Global (305); NA (102); EU (127); Asia (76))

5

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Globally, 75% of investors employ ESG strategies, varying from 53% to 92%
across regions; 56% of users integrate ESG into investment philosophy.

GlobalApproaches to ESG Implementation

GlobalApproach

NA

EU

Asia

(Total)ESG Integration
Systematic inclusion of ESG factors into theinvestment process

36%

29%

65%

66%

64%

67%

45%

35%

53%

40%

44%

42%

43%

47%

Active Ownership
Shareholders exercising power to influence more
ESG-compliant practices from corporate leaders

11%

34%

Inclusionary Screening
Screening in securities for meeting ESG criteria

17%

27%

Impact Investing
Investing to secure positive outcomes for a specific
cause

11%

23%

34%

41%

30%

34%

15%

32%

18%

41%

33%

32%

36%

26%

39%

23%

21%

17%

Exclusionary Screening
Screening out securities for not meeting ESG criteria

17%

Thematic Investing
Investments seeking to benefit from the advancementof certain macro developments, like subsidies inGreen Energy

Norms-Based Screening
Screening of investments against certain minimum
standards as dictated by international norms

6%

3%

26%

18%
Ranked #1

21%
Ranked #2 or #3

Total

Q18. Of the following approaches to ESG investing, which ones are the most appealing to you when considering an ESG manager or strategy? Please rank top 3. (Base: Global (271), NA (80), EU (125), Asia (66))

6

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Systematic inclusion of ESG remains the preferred approach across regions;only other approach with >50% appeal is active ownership, in Europe.

GlobalCurrent ESG Investors – Main Objectives

Main Objective in Using ESG in Europe
Global

NA

EU

Asia

(Total)Positively impacting society/environment

28%

Satisfying stakeholder demand/needs

20%

Reducing risk

22%

Meeting regulatory requirements/industry
standards

18%

Enhancing returns

Ranked #1

9%

41%

69%

44%

29%

28%

26%

64%

51%

46%

35%

Ranked #2 or #3

67%

68%

72%

68%

66%

55%

60%

53%

38%

21%

54%

53%

37%

32%

38%

Total

Q2. Which of the following do you consider to be the main objective in using ESG in your portfolio? Rank the top 3, with 1 being the most important. (Base: Global (229), NA (54), EU (117), Asia (58))

7

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Almost 70% of investors cite positively impacting society/environment as main
ESG objective, with satisfying stakeholder demand close behind at 64%.

Global

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Contents
Objectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

8

GlobalCurrent Users – Importance of E, S and G“S”
Social“E”
Environmental

Now
Global

NA

Asia

32%

24%

EU

32%
26%

33%

28%

NA

22%

26%

EU

21%

29%

NA
EU
Asia

14%

27%
43%

EU

43%

41%

11% 2%3%

33%

7%

Asia

44%

35%

21%

15%

28%

25%

3%

37%

17%

6%4%

28%

37%

28%

6%

NA

24%

41%

26%

4%6%

13% 3%

EU

29%

36%

27%

5%3%

16%

Asia

29%

34%

34%

4%

11% 4%
19%

Global

6%

NA

25%

9% 3%

EU

20%

9% 4%

Asia

5 - Extremely Important37%

Global

20%

24%

37%

15% 2%3%

5%3%

35%

26%

38%

27%

26%

31%

42%

NA

43%

30%

Global

7% 4%

35%

27%

22%

6% 3%

37%
32%

19%

Global31%

28%

GlobalAsia“G”
Governance29%

In 24 Months

4

3

40%

34%

31%

17%

35%
54%

2

19%

37%

37%

4% 3%

9% 6%

24%
27%

5% 2%

13%

2%2%
7%

1 - Not At All Important

Q3. Among the three main constituent parts of ESG - Environmental, Social and Governance – please indicate how important their role is in your organization’s investment approach now, and how important you think they
will be in 24 months? (Please use a scale from 5 = “Extremely Important” to 1 = “Not at all important”.) (Base: Global (229), NA (54), EU (117), Asia (58))

9

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Institutional investors plan to increase their focus on all three components of
ESG over the next 24 months, with a particular emphasis on the ‘E’ and ‘G’.

GlobalMost Important ESG Issues – Environmental

Most Relevant ESG Themes - Environmental(Number of Mentions)NA

GlobalEU

Asia(Total Mentions)

Climate change

71

Sustainable supply
chain management
Water

29

7 5 145

35

77

33

26

77

35

18

32

23

10 10 12 7 5 44

12

19

13

8 13 6 9 1 37

20

12

5

5

24

2

5 7 3 7 5 27

4

10

13

6 64 88

11

5

Carbon emissions
Clean energy

33

83
16

36

26

15 4 10 138

10 5 6 73

Biodiversity 3 14 6 4 4 31
Clean technology
Waste

24

#1 Selection#2 Selection#3 Selection#4 Selection#5 Selection

Total

Q20. Which ESG causes or themes are most relevant or meaningful to your organization? Please rank up to five, with 1 being most relevant. (Base: Global (269), NA (82), EU (119), Asia (68))

10

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Most relevant ‘E’ themes noted across all regions are carbon emissions &climate change, which were cited twice as often as other themes globally.

GlobalMost Important ESG Issues – Social

Most Relevant ESG Themes - Social(Number of Mentions)Global

NA

EU

Asia

(Total Mentions)

Diversity & Inclusion

14

27

24

23

9

97

44

34

19

22

39

12

11

30

16

10

17

13

Human capital management 2 5 11 12 4 34

9

13

12

Modern Slavery 3 2 12 8 8 33

12

14

7

Community Involvement 2 6 4 12 6 30

11

8

11

Product Safety & Quality 22 6 8 6 24

8

6

10

Labor standards 5

Excluding investments
deemed to do harm
Ethically managedsupply chains

8

20
14

23
13

11
19

8 11 10 11#1 Selection

14

73

3 57

40

#2 Selection#3 Selection#4 Selection#5 Selection

Total

Q20. Which ESG causes or themes are most relevant or meaningful to your organization? Please rank up to five, with 1 being most relevant. (Base: Global (269), NA (82), EU (119), Asia (68))

11

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‘S’ themes most relevant for investors are D&I and labor standards, with theformer a dominant consideration in NA and the latter a leading issue in EU.

GlobalMost Important ESG Issues – Governance

Most Relevant ESG Themes - Governance(Number of Mentions)NA

GlobalEU

Asia(Total Mentions)

Business ethics including corruption /bribery, anti-competitive practices
Corporate transparency

16 8 1523

7 12 14 15

Reporting transparency / Disclosure 25 8 11

25

32

29

94

77

51

Shareholder rights 5 9 8 4 26

Executive compensation

4 9 8 23

Cybersecurity 244 9 3 22
Board practices including over4 5 6 4 21
boarding, CEO / Chair duality#1 Selection#2 Selection#3 Selection

29

40

25

22

30

25

17

20

14

6

10

10

7

12

4

13

6

3

8

10

3

#4 Selection#5 Selection

Total

Q20. Which ESG causes or themes are most relevant or meaningful to your organization? Please rank up to five, with 1 being most relevant. (Base: Global (269), NA (82), EU (119), Asia (68))

12

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Across all regions, ‘G’ themes most relevant for investors are businessethics and corporate transparency.

Global

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Contents
Objectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

13

Global

Review of ESG Credentials in Manager Selection

Decision Making Stage Where Manager’s ESG Credentials Are EvaluatedGlobal (277)

As an initial screen

36%

During the preliminary due
diligence

32%

Later on in the decisionmaking process

EU (125)

NA (87)

20%

42%

31%

18%

Asia (65)

25%

46%

34%

28%

13%

17%

Only as a tie-breaker

8%

14%

5%

5%

Other

7%

10%

6%

5%

Q12. At what point in the decision-making process would you consider the ESG credentials of a manager or strategy?

14

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Globally, investors consider ESG in manager selection early in their decision making
process, particularly in Europe and Asia.

GlobalManager Effectiveness of ESG Communication

Managers’ Effectiveness in Communicating and Evidencing ESG Approaches

Global (274)

NA (82)

EU (124)

Asia (68)

6%

26%

9%

22%

4%

6%

39%

35%

34%

28%

38%

16%

5 - Excellent

21%

44%

4

15%

24%

3 - Good2

1 - Needs Improvement

Q15 On a scale of 1 to 5, where 1 is “Needs Improvement” and 5 is “Excellent,” how well, on average, do investment managers communicate and evidence their ESG approaches?

15

9%

6%

10%

10%

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Globally, only 6% of investors rate managers ‘excellent’ at communicatingand evidencing their ESG approaches.

GlobalManager Source of ESG Communication

Important Sources of ESG Communication from Managers
Proportion Rating Each Factor 4 or 5

GlobalPortfolio Manager(s) (281)43%

ESG Specialist(s) (280)

31%

29%

Senior Management (275)17%

Investment or ProductSpecialist(s) (276)13%

Relationship Manager (279)10%5 - Very Important

30%

27%

14%

4

23%

Asia

67%

80%

70%

40%

68%

67%

14%

47%

43%

44%

11% 9%

33%

46%

43%

16%

24%

26%

18%

6% 3%

11% 8%

12%

38%

35%

EU

17%

29%

28%

NA

25%

3 - Somewhat Important

2

1 - Not Important

Q14. When investment managers discuss their ESG approach, on the same 5 point scale, how important is it for you to hear from people in the following roles?

16

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Across all regions, investors consider it important to hear directly from PMs
and ESG specialists when discussing ESG investment approaches.

Global

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Contents
Objectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

17

GlobalMetrics Frameworks for ESG Reporting

Metrics Frameworks Used for ESG Reporting in Europe

UN Sustainable Development
Goals (SDGs)

Global

NA

EU

Asia

18%
14%

10%

24%

18%

Task Force on Climate-Related
Financial Disclosures (TCFD)

14%
9%

4%

20%

15%

Net Zero

12%
6%

3%

17%

14%

11%

7%

16%

7%

8%

2%

8%

14%

80%

41%

61%

Other

Global Reporting Initiative (GRI)*

4%

Do Not Report Against a Specific
Metrics Framework
2022

58%
75%

2021

*Note: Global Reporting Initiative was not asked in 2021
Q25. Do you report against a specific metrics framework? (Base: Global 292 (2022); 277 (2021))

18

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58% of investors globally do not report against a specific metric framework,
down from75% in 2021; those who do report tend to use SDGs or TCFD.

GlobalAdoption of Net Zero Target

Have Specific Net Zero Target

Global (229)

15%

25%

60%
Yes, we have a
specific net zerotargetNA (74) 5%

EU (103)

18%

77%

23%

27%

50%

We do not currently
have one, but areplanning to
implement one

We do not have one
and are not planningto implement one
Asia (52)

13%

33%

54%

Q26. Do you have a specific net zero target?

19

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Globally, 40% of investors currently have or plan to implement a Net Zerotarget; this varies widely by region, with NA at 23% and Europe at 50%.

GlobalAdoption of Net Zero Target (cont.)

Allocations Linking Back to a Net Zero Target

All allocations, including
historic, must link

Only some allocations

Other

Global (64)

It increases my confidence in an
Investment Manager when they
commit to Net Zero goals

20%
33%
16%
24%
33%
22%
42%
18%

EU (38)

46%
59%
48%
33%

I require all my managers to have a
Net Zero commitment

15%
0%
19%
17%

None of the above

16%
18%
12%
25%

6%
11%
5%
6%
NA (9)

66%
71%
73%
46%

I expect my manager to disclose
what a Net Zero goal means for myportfolio to be credible

41%
33%
37%
53%

All future allocations
must link

Net Zero Expectations for Managers

Asia (17)Global (93)

Q26a. Do all allocations have to link back to the target?
Q26b. Which of the following statements do you agree with, if any?

20

NA (17)

EU (52)

Asia (24)

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41% of investors adopting/plan to adopt Net Zero want future allocations
linked to target; 66% expect their managers to disclose portfolio impact.

GlobalReasons for Not Having a Net Zero Target

Reasons for NOT Adopting a Net Zero Target

61%
61%
67%
50%

We still need to learn more about theapplication of Net Zero targets

43%
42%
49%
36%

Investment Manager should focus on
the individual ESG objectives ofasset owners rather than unilateraltargets like Net Zero

Global (136)
NA (57)
EU (51)

40%

58%

Net Zero is not an important topic for
our investment strategy

None of the above

25%
32%

8%
5%
8%
14%

Q26c. Which of the following statements do you agree with, if any?

21

Asia (28)

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Investors without a Net Zero target indicate a need to learn more about it;
Net Zero is a less important topic in NA compared to Europe and Asia.

Global

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Contents
Objectives and Methodology

General Perception and Utilization of ESG

ESG Decision-Making Considerations

ESG Selection Process

Metrics, Measurement and Reporting

The Outlook for ESG

22

GlobalChanges to ESG Use in Next 3 Yrs. – All Investors

Expected Changes to ESG Usage in Next 3 Years

Plan to increase
ESG integration /allocation
Plan to make nochanges

10% plan to increase
across entire portfolio
69%

31%

90% plan to increase
across asset classes

Asset Classes Most in Need of Alignment with ESG Principles
59%
16%

48%
37%

35%

28%

21%
17%
14%

5%

9%

7%

4%

Real Assets

Private Markets

Multi-Asset

Other

23%
43%

24%

25%

Equities

Fixed Income

Ranked #1

Ranked #2 or #3

Q32. Over the next three years, how do you plan to use ESG in your portfolio? (Base: 285)
Q32a. Which areas of your portfolio are most urgently in need of greater alignment with ESG principles? (Base: 166)

23

Total

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Globally, almost 70% plan to increase ESG integration/allocation in next 3
yrs.; equities are most in need of ESG alignment, followed by fixed income.

Global

ESG Manager Changes Over 5 Yrs. – Current Users

Percentage of Portfolio Potentially Undergoing Manager Changes in Next 5 Years
Due to ESG Considerations
NA (49)Global (200)More than 50%

25% to 50%

10%52% expect
ESG-driven
managerchanges on>10% oftheir
portfolios

30%

Up to 10%

None

2%

12%

10% to 25%

EU (99)

10%

13%

12%

14%

10%

16%

34%

34%

15%

Asia (52)

51%

20%

27%

11%

Q4. Over the next 5 years, what percentage of your portfolio could potentially undergo manager changes due in large part to ESG considerations?

24

35%

29%

15%

All information is strictly confidential and not to be reproduced without the explicit consent of Coalition Greenwich.

Just over half of current ESG investors expect to make manager changes on>10% of their portfolios in the next 5 years due to ESG considerations.

GlobalMark Buckley
Global Head of Investment Management
Mark.Buckley@greenwich.com

Todd Glickson
Head of Investment Management – North America
Todd.Glickson@greenwich.com

Parijat Banerjee
Head of Investment Management – Asia
Parijat.Banerjee@greenwich.com

Seiji Ishii
Head of Investment Management – Japan
Seiji.Ishii@greenwich.com

Sophie Emler
Senior Relationship Manager
Sophie.Emler@greenwich.com

Susan Gould
Senior Relationship Manager
Susan.Gould@greenwich.com

Alasdair Philip
Senior Relationship Manager
Alasdair.Philip@greenwich.com

Arifur Rahman
Senior Relationship Manager
Arifur.Rahman@greenwich.com

Joseph Matessi
Relationship Manager
Joseph.Mattesi@greenwich.com

Erin Dunn
Relationship Manager
Erin.Dunn@greenwich.com

25

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Contact Information

GlobalThis Document is prepared by Coalition Greenwich, which is a part of CRISIL Ltd, an S&P Global company. All rights reserved. This Document may
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