Sustainable and efficient investing continues to grow – University of Cambridge survey

According to a Cambridge Associates survey released on Monday, institutional investors have increased sustainable and high-performing investment activity by 81% over the past four years overall, with significant differences by type of investor and region.

A biennial client survey found that 65% of 144 respondents are actively engaged in sustainable and efficient investing, compared to 61% in 2020 and 36% in 2018. The 2022 survey included family offices and the wealthy for the first time.

Foundations and endowments reported the highest integration rates for sustainable and high impact investing at 73% and 69% respectively, compared to 52% for family offices and high net worth individuals.

Institutional investors outside the US invest the majority of their portfolio, with one-third reporting that more than half of their long-term portfolios are directed towards sustainable and efficient investments. In contrast, more than half of US respondents reported that less than 10% is allocated to such investments.

Climate change and resource efficiency were the most common areas of focus for sustainable investing respondents, with 77% investing in these topics, compared to 38% in the 2018 survey. Other topics mentioned were investment in various managers, and social and environmental justice.

Of institutions implementing sustainable and efficient investment strategies, 51% have committed more than 5% of their long-term investment pool, and 88% have increased their commitments in the last five years. For more than 90% of these respondents, financial performance was the measure of the success of their sustainable investment programs.

Of the respondents not currently engaged in sustainable and impact investing, 45% plan to do so, and among all respondents, 90% said they plan to increase their allocation over the next five years.

The continued proliferation of sustainable and impact investing “reflects a growing recognition that these factors are essential to investment decisions and long-term portfolio outcomes,” said Liqian Ma, global head of sustainability and impact investing research, in a press release about the survey.

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