Callan’s 6th Annual ESG Survey Reveals Uptick in Adoption and Implementation

Incorporation rates in 2018 were the highest in the survey’s history, surpassing 40% for the first time

SAN FRANCISCO--()--Callan, a leading institutional investment consulting firm, announced the results of its sixth annual ESG Survey, noting that 43% of U.S. institutional investors have incorporated environmental, social, and governance (ESG) factors into their investment decision-making process in 2018. The percentage is the highest recorded in the survey’s history—and nearly doubled since its launch in 2013 (22%).

Commissioned and conducted by Callan, the ESG Survey features the responses of 89 unique U.S. institutional funds, with the largest funds incorporating ESG factors at the highest rate (72%). Historically, endowments and foundations have had the highest ESG adoption rates—with foundations at 64% in 2018 and endowments at 56%. The rate for public funds is 39% while corporate funds experienced a decrease in adoption rates (20%).

The research and data supporting ESG investment have matured considerably in the past five years in the U.S., and investors are now more informed about what ESG means and the implementation options available to them,” said Anna West, senior vice president and co-manager of Callan’s Published Research Group. “The latest survey reinforces the notion that ESG is not a one-size-fits-all solution. Rather, investors are finding implementation approaches that match their funds’ goals. The shift in implementation strategies—from introducing language to identify ESG goals and beliefs, to working with investment managers to implement those concepts—suggests we’re moving into a new phase with ESG in the U.S.”

Callan’s 2018 ESG Survey Highlights:

  • Adoption Growth Continues: After plateauing in 2017 (37%), there was a reemergence of the upward trend in ESG adoption rates since the inception of the survey in 2013.
  • Preparation to Implementation: Implementation approaches reflect a new phase of ESG incorporation. Previously, investors focused more on pursuing education and adding ESG language to investment policy statements. In 2018, 55% of those implementing ESG have communicated its importance to investment managers and have considered ESG factors with every investment/investment manager selection.
  • DB vs. DC: There was a significant difference between ESG adoption rates among defined benefit (DB) and defined contribution (DC) plans. Corporate DB plans incorporated ESG factors into the investment decision-making process at three times the rate (33%) of their DC counterparts (9%). Similarly, public DB plans utilized ESG factors at twice the rate (43%) of their DC counterparts (20%).

The survey is offered in Callan’s Research Library, titled “2018 ESG Survey.” While the website requests that visitors register, the survey and other library content are offered at no cost.

About Callan

Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $2 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.

About Callan Institute

The Callan Institute, established in 1980, is a source of continuing education for those in the institutional investment community. The Institute offers practical, relevant, original research in an easily digestible format that includes industry-recognized surveys, timely blogs, live events, educational conferences, and “Callan College” workshops. Learn more at callan.com/callaninstitute

Contacts

Callan
Elizabeth Anathan, 415-274-3020
mediarelations@callan.com

Contacts

Callan
Elizabeth Anathan, 415-274-3020
mediarelations@callan.com