BNP Paribas survey shows ESG integration is maturing, with investors in the Nordic region being its leading exponents
A BNP Paribas survey of 356 asset owners, official institutions, and asset managers, shows that ESG integration is maturing, with a growing number of investors allocating more than 75% of their portfolio to ESG and know-how increasingly embedded throughout organisations. However, institutional investors are at different stages of readiness for net zero.
BNP Paribas ESG Research 2021 Regional highlights:The Nordics
ESG is used deeply and widely by Nordic investors
Investors in the Nordic region are often considered leading exponents of ESG investing and this study fully supports this view. Nearly seven in 10 (68%) Nordic investors see ESG as being either integral, central or a necessity in how they invest (51% globally and 67% in Europe). This is expected to rise in two years’ time, as nearly nine in 10 (87%) expect ESG to be either integral, central or a necessity to their investment strategy (81% globally and 88% in Europe). These findings show other regions can be expected to catch up with Nordic investors when it comes to embedding ESG in their approach to investment.
ESG integration and negative screening are the most widely used approaches among Nordic investors. Many have used these strategies for at least six years. This suggests there is scope for Nordic investors to increase their use of thematic and impact investing in the future.
Nordic investors apply ESG investing across a range of asset classes, with above-average use within equities, fixed income, real estate and infrastructure. Further, a higher proportion of Nordic investors have 75% or more of their portfolios investing in strategies or funds incorporating ESG (40% versus 20% globally and 33% for Europe). In two years’ time, 59% of Nordic investors expect at least 75% of their portfolios to be ESG-aligned (33% globally and 49% in Europe).
Reputation and returns are key ESG drivers for Nordic investors
There are several reasons why Nordic investors use ESG factors in their investment decision-making. Perhaps surprisingly, brand image and reputation/mitigating headline risk was highlighted by 68% of Nordic investors as a reason (58% globally and 56% Europe), ahead of improved long-term returns and regulatory and disclosure demands.
The critical reputational dimension of ESG among Nordic investors is reinforced by the fact that nearly seven in 10 (69%) see the risk of greenwashing as a significant barrier to greater adoption of ESG investing, ahead of inconsistent data (64%).
Nordic investors are also more likely to see ESG as providing improved long-term returns (59% do so, vs. 45% globally and 46% in Europe). Regulatory and disclosure demands are also more prevalent as a driving factor for Nordic investors adopting ESG, with five in 10 (51%) citing this (26% globally and 37%) in Europe.
Climate change, sustainability and social issues are ESG priorities
Addressing climate change and sustainability, as well as social issues, are key ESG priorities for Nordic investors. At present, Nordic investors are roughly in line with their peers in committing to reaching net zero greenhouse gas emissions by 2050, with 23% making this commitment at firm level (19% globally and 26% in Europe) and 32% in the early stages of doing this (31% globally and 27% in Europe). But over four in 10 (43%) anticipate that they will have set a net zero target by 2050 in two years’ time (33% globally and 35% in Europe).Nordic investors have been strong adopters of the UN SDGs (Sustainable Development Goals), with nearly half (46%) complying with them (22% globally and 35%) in Europe. Compared to most investors, they are more likely to select a few SDGs to align with and the most selected are those related to human rights and social issues, climate and sustainability and biodiversity and life on earth.
“In the context of growing urgency on climate change, ESG integration is a must. We are proud to see that investors in the Nordic region are pioneering the ESG integration ahead of their European and global peers. As the World’s Best Bank for Sustainable Finance, BNP Paribas is committed to supporting the transition to a more sustainable economy and working hand in hand with our clients in the Nordics toward a more sustainable future.” Eirik Winter, CEO Nordic Region
Nordic Press Contact:
Frida Stockenvall
T +46 (8) 5623 2804 | frida.stockenvall@bnpparibas.com
Press Contact
Caroline Lumley T +44 (0)20 7410 4650 | caroline.lumley@uk.bnpparibas.com