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20
24
SOCIETE
GENERALE
ESG SURVEY
About the respondents
CONDUCTED IN Q4 2024, THE ESG Survey aims at gathering institutional investors insights into ESG trends and developments around 4 main areas:
The majority of respondents are located in EMEA (73%) and mainly represent institutions headquartered in EMEA (69%). Their roles are diverse dominated by ESG team representatives:
ESG Team 21%
Syndication 16%
PM 14%
Origination 13%
Coverage 11%
Analyst 9%
Sales & Trading 6%
Treasury 5%
Other 3%
Strategy / Management 1%
01
MOTIVES
TO
ESG CONSIDERATION
The most designated factor towards increased ESG investments differs depending on the institution type surveyed as illustrated below:
- End investors demand for ESG among asset managers
- Business opportunities and ESG risk mitigation among banks
- ESG risk mitigation among insurers
- Fiduciary duty and regulations equally among pension funds
BANKS N24
INSURERS N3
ASSET MANAGERS N44
PENSION FUNDS N7
ESG is viewed in majority as a neutral driver for higher financial performance except for banks considering it as positive driver. A few percent of respondents within asset managers and pension funds consider ESG as a barrier for higher financial performance.
BANKS N24
INSURERS N3
ASSET MANAGERS N44
PENSION FUNDS N7
02
APPROACHES
TO
ESG CONSIDERATION
Motives for ESG Consideration
Motives for ESG consideration are heterogenous across the type of institution surveyed. The most commonly designated driver for more ESG investments within asset manager respondents is the end investors demand for ESG. ESG risk mitigation is a common material driver cited by surveyed banks and insurers.
A majority of asset managers view ESG as a neutral driver for higher financial performance while majority of banks consider it as positive driver.
Approaches to ESG Consideration
Institutions headquartered in AMER are lagging other regions on their ESG maturity as illustrated notably by low adoption of ESG policies, ESG-related exclusion criteria or ESG capital deployment targets.
Risk of greenwashing and lack of standardized data are the two main challenges and concerns faced by surveyed institutions with regards to ESG investing except for surveyed insurers primarily concerned by the unattractive pricing of ESG assets.
Integration for ESG Consideration
Engagement & dialogue is the most widely deployed ESG investment approach among surveyed institutions, notably ahead of negative and positive screenings.
The challenge around the completeness and consistency of ESG data from external sources lead most respondents to assign a proprietary rating to classify an investment as ESG.
Market Expectations and Outlook
Generally, both AMER and EMEA based investors share the same appetite for more Green, Social and Sustainability products favoring in particular transition bonds and social bonds.
Globally, more than three-quarters of respondents plan to increase their allocation to new ESG products in the next years. Surveyed asset managers and asset owners will favor low carbon-intensive issuers/assets as a first choice rather than ESG labelled products or high ESG rating feature.
108 EMEA
23 AMER
16 APAC
Investment Strategy
Insurers are most impacted by end investors demands for increased ESG focus into their investment strategies (67%) than other institutions but globally the consideration of this factor doesn’t impact directly investment strategies.
Does your institution have a formal ESG Policy applicable to its investing activities?
Are end investor demands for increased ESG focus changing your investment strategy? N61
Exclusion based investing is a very common sustainable investment approach except for institutions headquartered in AMER where 47% of institutions have no ESG-related exclusion criteria.
Sectorial exclusions remain the most implemented exclusion approach in EMEA and APAC. Coal and tobacco are the two sectors being excluded largely. Oil & gas upstream sectors are negatively screened by a substantial proportion of institutions headquartered in EMEA and to a lesser extent regarding oil & gas mid and downstream sectors.
In order to implement these sectorial exclusions, a large majority of respondents (74%) perform internal analysis to assess the applicability of their exclusion policies.
Do you have any
ESG firm-wide exclusion? N141
Are there any sectors that you are excluded from investing on ESG grounds? N120
Respondents Role n147
Respondents location n147
Which ESG products does your institution have experience investing in? N123
What is driving you towards more ESG investment? n78
What is your view of ESG as a driver for higher financial performance? N78
Per institution type and respondent location (according to where the respondent is based).
Per institution type and respondent location (according to where the respondent is based).
Lastly, asset managers are mainly active in the GSSS market as investors in green, social and sustainability linked bonds. Green bonds, green loans and sustainability linked loans are the mainstream products where banks are involved.
The respondent’s location above is based on where they are based. When taking into consideration where their company headquarters is instead, 101 are located in EMEA, 27 in APAC and 19 in AMER.
How do you implement these sectorial exclusions? N142
For asset managers, banks and pension funds, risk of greenwashing and lack of standardized data are the two main challenges and concerns they are facing with regards to ESG investing. Insurers have raised the unattractive pricing of ESG assets as the main challenge.
What are the key challenges and concerns you are facing with regards to ESG investing? N79
BANKS N24
INSURERS N3
ASSET MANAGERS N45
PENSION FUNDS N7
ESG goals and targets
The importance of ESG in the asset management and the insurance industry is demonstrated by the deployment of specific ESG funds responding to the needs of their clients and all stakeholders. Globally, 59% of respondents declare having specific ESG funds to deploy.
Per institution type and respondent location (according to where the respondent is based).
(According to where the respondent headquarter is)
(According to where the respondent headquarter is)
Do you have specific ESG funds to deploy?
Roughly equally distributed, climate funds and green funds are the first two categories in which asset managers deploy their ESG funds. Then, social funds hold the rank 3 for 44% of asset managers and other thematics the rank 4 for 53% of them.
For banks, green funds are ranked systemically as the first category in which ESG funds are deployed followed by social funds in rank 2. Then, climate funds and other thematics are equally distributed in rank 3 and rank 4.
Eventually, all surveyed insurers consider the deployment of ESG funds with the following priority order: green funds, climate funds, social funds and other thematics.
Eventually, all surveyed insurers consider the deployment of ESG funds with the following priority order: green funds, climate funds, social funds and other thematics.
BANKS N2
INSURERS N2
ASSET MANAGERS N34
Do you have specific ESG capital deployment targets?
Globally, one quarter of banks don’t have specific ESG capital deployment targets but 41% intend to deploy such in a near future except banks headquartered in AMER. Banks headquartered in EMEA are the most advanced with 37% having such targets; still the gap with APAC should be filled in the near future.
According to where the respondent headquarter is N83
According to where the respondent headquarter is: N146
03
INTEGRATION
OF
ESG CONSIDERATION
In term of geography, American institutions are slighty less likely to have internal team on this sector.
Organization
Does your institution have a specialised ESG/Sustainable Research team? N147
Does your institution have a specialised ESG/Sustainable Finance Advisory team? n138
ESG investment approaches share common ground across institutions. Engagement & dialogue is the most widely deployed approach, by 65% of investors globally, followed by negative screening (56%), positive screening (46%), impact investing (39%) and thematic investing (33%).
strategy and processes
How ESG considerations are integrated into your internal policies? n147
Do you ascribe any value to ESG-linked features for issuers or transactions? n76
For all respondents but insurers, ESG linked-features for issuers or transactions are largely regarded as an element of the investment decision process, not necessarily assigned with a monetary value. When it is not the case, institutions ensure basic ESG credentials are met as a prerequisite for investment.
The challenge around the completeness and consistency of ESG data from rating agencies and specialized providers make it difficult to rely only on external/rating certification. In this context, most respondents assign a proprietary rating to classify an investment as ESG except pension funds, freed from this assessment.
Do you require an external rating/certification to classify the investment internally as ESG? n140
This trend is confirmed by the highest proportion of institutions relying on external partnership with ESG data providers combined with internal analysis to implement their ESG policies, globally at 52%. Then, a non-negligible proportion of institutions declare not relying at all on data from external sources to implement their ESG policies (e.g. 31% of banks, 33% of insurers, 25% of asset managers).
Do you rely on partnerships with external data providers to implement your ESG policy? n144
04
REGULATORY IMPACTS
ON STRATEGY
AND PRODUCTS OFFERINGS
With regards to the EU Sustainable Finance Disclosure Regulation (SFDR), which classifications are you targeting for your funds? n20
The principal SFDR classification targeted by almost half of asset managers for their funds is Article 8 while around one third target either article 8 or article 9. A very small percentage of respondents are willing to consider none of SFDR funds’ categories.
Globally, 47% of institutions report an alignment of investments with EU taxonomy between 1% and 5%.
50% of asset managers report alignment in this 1% to 5% category while this percentage drops to 17% in the 5% to 15% category. The other ranges of alignment (<1%, between 15% and 30% and >30%) are equally represented. 63% of asset managers plan to increase this percentage.
Do you plan to increase this percentage? n20
What is the percentage of EU taxonomy alignment of your investments? n19
following esma's guidelines on funds names using esg or sustainability related-terms, do you plan to? n19
If concerned by the application of ESMA guidelines on funds’ names, more asset managers plan to adapt funds’ names, rather than adjusting investment’s universe to comply with the rules.
Do you expect EU GBS labelled bonds to trade at a premium vs other Green bonds? n29
By far, the first advantage highlighted by respondents (71%) about the EU Green Bond Standard refers to the common and standardized disclosures for issuers. Then, investors (52%) consider the alignment with the EU Taxonomy as the second advantage, followed by the external reviewer check (26%).
What strong advantages do you see in EU Green Bond Standard (GBS) labelled bonds? n31
Despite clear opinion on the EU GBS advantages, a large majority of investors (69%) don’t expect EU GBS labelled bonds to trade at a premium vs other Green bonds.
05
SUSTAINABLE
FINANCE
Are there any sectors where you would like to see more ESG issuance? n102
Globally but also per region-based location of the respondent, more ESG issuances from the three following sectors are favored: i) Oil & gas, ii) Metals & mining and iii) Industrial. In APAC, there is no big appetite (9%) for more ESG issuance from the Autos sector compared to AMER (50%) and EMEA (33%).
Generally, both AMER and EMEA based investors share the same appetite for more Green, Social and Sustainability (GSS) products favoring in particular transition bonds (55% globally) and social bonds (41% globally). There is a divergence on outcome bonds for which 75% of AMER based investors are keen to see more supply vs 7% for EMEA based investors.
Which type of GSS products would you like to see more supply? n22
06
TRANSITION
FINANCE
How much of your time is dedicated ESG topics? N145
Which products do you cover? N90
Among the population of respondents holding one of the following roles: Analyst, Origination, Portfolio manager, Sales & Trading and Syndication, 58% of respondents are involved in loans capital markets, followed by 38% in bonds markets.
Asset managers are mainly active in the GSSS market as investors in green, social and sustainability linked bonds. Green bonds, green loans and sustainability linked loans are the mainstream products where banks are involved.
Do you have any particular interest in Transition Finance? n141
Banks (80%), asset managers (69%) and pension funds (67%) express the highest interest in transition finance. Insurers tend to be more pragmatic with only 33% of respondents in this category declaring any particular interest in transition finance.
Can you look at a transaction with some of the below issues if a credible transition is in place? n137
There is a consensus among a substantial proportion of institutions to consider the credibility of a transition plan as a driver of a transaction in the case where current ESG issues are observed. Only insurers declare a strict position with 100% of them not being opened to such possibility while for the other institutions, this is less than 30%.
07
OUTLOOK
Do you plan to increase allocations to new ESG products in the next two years? n146
Globally, 81% of respondents plan to increase their allocation to new ESG products in the next years. Among banks, 89% plan to do so while 73% of asset managers will follow the same trend as well as 57% of pension funds. Only a third of insurers declare being in favor of such increase and hedge funds are not at all aligned.
BANKS N2
INSURERS N2
ASSET MANAGERS N31
PENSION FUNDS N4
Asset managers and asset owners (insurers and pension funds) tend to favor low carbon-intensive issuers/assets. Asset managers and pension funds then consider ESG labelled products as the second preferred choice before considering high ESG ratings feature.
Banks have an equal preference for ESG labelled products, high ESG ratings and low carbon intensive issuers/assets.The second most preferred one is low carbon footprint, followed by high ESG ratings.
Which issuers/assets will you favour going forward?
Based on previous conducted surveys
Almost all investors now have a formal ESG policy. However, banks were relative laggard compared to non-banks which have been flat since 2021
ESG policy for investment activities is definitely a standard adopted by institutions across all regional headquarters location. AMER is lagging with the smallest percentage of institutions headquartered in this region having such policy (84%).
We are seeing divergent trends between banks, which have flatlined since 2022 in their ESG deployment targets and non-banks, which are seeing significant growth in all geography.
Based on previous conducted surveys
According to the respondents N64
Based on previous conducted surveys
Does your institution have a specialised ESG/Sustainable Finance Advisory team? (by geography)n138
Asset Managers, banks and pension funds have largely made the choice to rely on internal teams dedicated to ESG and sustainability -including Research- to drive their strategy. Insurers are more often equipped with a unique team dedicated to ESG research.
A majority of non-banks investors continue to value ESG-linked transactions. However, we are seeing decrease willingness to pay for those features and an increase in the number of institutions not valuying them at all, particularly in 2024.
Based on previous conducted surveys
Do you have internal incentives to promote esg investments?
Roughly 2/3 of banks continue to have internal incentives (lower RWA or ROE for example). However, we have seen almost no changes since 2022 among all geography.
RESPONDENTS (N)
BANKS
ASSET MANAGERS
5% PENSION FUNDS
2% INSURERS
1% HEDGE FUNDS
147
62%
31%