BOSTON, January 30, 2023 – Institutions have increased engagement in sustainable and impact investing by over 80 percent over the past four years, according to a survey released today by global investment firm Cambridge Associates (CA). The firm’s biennial Sustainable and Impact Investing Insights and Perspectives client survey aims to explore the evolution of how investors are approaching sustainable and impact investing. The 144 respondents of the 2022 survey represent a diverse, global group of institutions and asset owners.
Notable shifts and trends in sustainable and impact investing activity include:
- Nearly two-thirds (65%) of the survey’s respondents reported engaging in sustainable and impact investing, a 4 percentage point (or 6%) increase since 2020 (61%) and a significant increase (+29 percentage points, or 81%) relative to 2018 survey results (36%).
- Of those engaging in sustainable and impact investing, 76% cited employing impact investing as an investment strategy, a significant increase from 59% in 2020.
- More than half (55%) of the institutions implementing sustainable and impact investing strategies have more than 5% of their long-term investment pool allocated to those strategies, and 88% of those institutions implementing sustainable and impact investing have increased their allocation to this area in the past five years.
- Furthermore, approximately 90% of respondents reported plans to increase their allocation to sustainable and impact investing over the next five years.
- Of the respondents not currently engaging in sustainable and impact investing, nearly half (45%) anticipate seeking exposure in the future.
These insights and trends reflect the firm’s longstanding work with asset owners to build portfolios that align with each institution’s financial and impact objectives. Close to two-thirds of institutions engaging in sustainable and impact investing consider social and/or environmental equity in investment decision-making. An additional 17% of the respondents anticipate considering these factors in the future.
“The continued expansion of sustainable and impact investing across markets reflects a growing recognition that these factors are material to investment decision-making and long-term portfolio outcomes,” said Liqian Ma, Global Head of Sustainable and Impact Investing Research. “Cambridge has worked with clients for over fifteen years to build resilient portfolios that seek to integrate all material risks and opportunities in the investment process, while aligning each portfolio to meet every institution’s unique financial and impact objectives.”
While the global adoption of sustainable and impact investing continues to grow, nearly doubling in four years, institutions outside of the U.S. continue to lead the way by investing more of their portfolio in line with impact strategies. A third of non-US respondents who engage in the strategy reported that more than half of their long-term portfolios are allocated to sustainable and impact investments, while more than half of US respondents have less than 10% allocated.
“We are proud to be working with industry-leading institutions that are dedicated to creating change through their investment portfolios, such as setting Net Zero objectives for their portfolios,” said Annachiara Marcandalli, European Head of Sustainability and Impact. “Our clients are adopting articulated Net Zero strategies. These include: decarbonization, deep engagement with managers to align their portfolios with the energy transition as well as making significant investments in climate solutions.”
Impact investing rose significantly over the last two years, while ESG integration and shareholder engagement also increased. There was a shift away from negative screening as a commonly selected strategy. Climate change and resource efficiency is the most common thematic focus area, followed by diverse manager investing and social and environmental equity.
To learn more about Cambridge Associates’ approach to sustainable and impact investing, visit our website. Additional in-depth reports and insights from the firm’s Sustainability & Impact Investing team can be found here, including CA’s 2023 outlook that highlights the expectation for meaningful shifts in net zero and other sustainable and impact strategies toward more impactful implementation approaches.
About Cambridge Associates
Cambridge Associates is a global investment firm. The firm aims to help pension plans, endowments & foundations, healthcare systems, and private clients implement and manage custom investment portfolios to generate outperformance so they can maximize their impact on the world. With more than 45 years of institutional investing insights, the firm has helped to shape and implement investment best practices and built strong global investment networks with the purpose of driving outperformance for clients. Cambridge Associates delivers a range of services, including outsourced CIO, non-discretionary portfolio management, staff extension and alternative asset class mandates.
Cambridge Associates currently maintains offices in Boston; Arlington, VA; Beijing; Dallas; Hong Kong; London; Munich, Menlo Park, CA; New York; San Francisco; Singapore; and Sydney. Cambridge Associates consists of six global investment affiliates that are all under common ownership and control. For more information, please visit www.cambridgeassociates.com.