For this Chart of the Week, we revisit the idea of ESG in a thematic sense to illustrate where we are today and what the acceleration of the biggest “mega-trend” since index-investing will look like in the future. It is easy to see how the social or “S” of ESG has risen to the forefront in 2020, but harder to know if it will remain on both the American public’s and professional investors’ minds as we enter 2021.
For U.S. investors there is no question that ESG is here to stay, with the OECD reporting that one-fifth of professionally managed U.S. assets is now invested at least partially on ESG principles, and Morningstar reporting $179.1 billion in U.S. sustainably managed assets as of September 30th, up 13% from the previous quarter. Coupled with a new administration being ushered in and president-elect Biden’s selection of Brian Deese – BlackRock’s Global Head of Sustainable Investing – as his top economic advisor, it is difficult to see any signs of slowing down.
As for the American public, they continue to have high expectations of America’s largest corporations to speak out on social issues. Our most recent survey research highlights that an overwhelming 79% of Americans say it will be just as important, or more important, for corporate leaders to speak out publicly on social issues over the next four years compared to today.
This week’s chart pulls from Edelman’s 2020 Institutional Investor Trust Report, which investigates trends in the institutional investor segment (investment funds, insurance companies, and pension funds). As institutional investors totaled $52 trillion in AUM to allocate at the end of 2019 (per BCG), there is tremendous opportunity to shift capitalism to be more stakeholder-driven and drive the narrative on social change.
Edelman reports the “S” in ESG “climbs to the most important ESG priority for U.S.Investors.” The chart below highlights the elevated importance of the “S,” showing a 15% increase across 100 U.S. institutional investors and a 10% increase from the 600 global institutional investors in the annual study.
JUST Capital continues to engage companies on the critical social issues that matter most to the public, most recently through our new Worker Financial Wellness Initiative, by becoming a founding partner with 21 Institutional Investor groups with over $3 trillion in AUM driving the Russell 3000 Board Diversity Disclosure Initiative, as well as by working with New York City Employees’ Retirement System to call on companies to disclose their EEO-1 data. More than 30 of the largest U.S. companies have since agreed to new disclosures.
Our highly differentiated datasets around workforce demographic disclosure, DE&I, and social equity continue to drive assets under influence through our various asset manager partnerships. Please reach out if you would like to work with us to create new tools and products that can drive real change on the critical “S” of ESG.