When It Comes to ESG, Institutions Don’t Walk the Talk

New data show a discrepancy between the number of institutions signing onto sustainability agreements and sustainable assets under management.

Chris Ratcliffe/Bloomberg

Chris Ratcliffe/Bloomberg

While many institutions are signing on to agreements to invest more sustainably, there is a discrepancy between the number of institutions signing these agreements and the capital invested in sustainable assets.

This is according to new data published Wednesday by shareholder advisory firm SquareWell Partners.

According to the data published by SquareWell, 96 percent of the top 50 asset managers based on assets under management signed onto the United Nations Principles of Responsible Investment, an agreement that encourages managers to invest based on environmental, social and governance factors.

But the UNPRI isn’t the only game in town. According to the report, there are more than 20 stewardship codes globally. In total, 94 percent of the top asset managers have signed onto one code, with the most prominent being the UK, Japanese, and Dutch stewardship codes.

Most recently, a new crop of institutions including the California Public Employees’ Retirement System, La Caisse de dépôt et placement du Québec, and PensionDenmark, among others, signed onto a United Nations agreement just over a week ago to transition their investment portfolios to net-zero greenhouse gas emissions by 2050.

But according to SquareWell’s report, all these agreements may not have their intended impact on investing.


The report, citing data from the Global Sustainable Investment Association, showed that $30.7 trillion assets globally were invested in global sustainable investment assets.

This is as 50 of the top asset managers – 96 percent of which signed onto the UNPRI – manage a combined $50.6 trillion.

“This indicates a potential issue in signatories not following the principles they signed up to or the GSIA is vastly underestimating sustainable assets,” according to SquareWell.

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Even as this is occurring, institutions are eager to publicly share their positions on ESG, the report shows.

“Nearly half of the asset managers reviewed produce position papers, offering insights and perspectives on a range of ESG topics from cybersecurity to water usage,” according to the report. Forty-eight percent of the 50 institutions included in the report had previously published a “position paper,” according to SquareWell.

In other words, according to SquareWell, there remains quite a bit of green-washing in institutional investing.