Institutional investors have increased their sustainable and impactful investment activity by 81% over the past four years, with wide variations across investor types and geographies, according to a Cambridge Associates study released Monday.
Our biennial client survey found that 65% of 144 respondents were actively engaged in sustainable and impact investing. The 2022 survey targeted family offices and high net worth individuals for the first time, compared with 61% in 2020 and his 36% in 2018.
Foundations and endowments had the highest integration rates for sustainable and impact investing at 73% and 69% respectively, while family offices and high net worth individuals had 52% integration rates.
Institutional investors outside the United States invest the majority of their portfolios, with one-third reporting that more than half of their long-term portfolios are allocated to sustainable and impactful investments. In contrast, more than half of US respondents report less than 10% of their allocation to such investments.
Climate change and resource efficiency are the most common areas of focus for respondents engaged in sustainable investing, with 77% investing in these themes compared to 38% in the 2018 survey. . Other themes mentioned were investing in diverse managers, and social and environmental equity.
Of those institutions implementing sustainable and impactful investment strategies, 51% have allocated more than 5% of their long-term investment pool, and 88% have increased their allocation in the last five years. For more than 90% of these respondents, financial results were a measure of the success of a sustainable investment program.
Forty-five percent of respondents not currently engaged in sustainable or impact investing expect to, and 90% of all respondents say they plan to increase their investment over the next five years.
The continued expansion of sustainable and impactful investing “reflects a growing recognition that these factors are important to investment decisions and long-term portfolio outcomes,” says Sustainable and Impact. Liqian Ma, global head of investment research at , said the study.