Sustainability in Capital Markets: A Survey of Current Progress and Practices
KKS Advisors & The High Meadows Institute / March 2019
Chris Pinney, Caitlin McCorkle, Sophie Lawrence and Stephanie Lau
In the three years since our 2015 survey on the state of ESG integration in Capital Markets, interest and engagement with ESG in capital markets can truly be said to have gone mainstream. ESG investment products flood the market in almost every investment category, from ETFs to fixed income and alternatives. ESG assets under management now total $30 trillion, up from $23 trillion in 2016 and are projected to grow to $35 trillion by 2020.
The first version of this report was published in January 2016, using 2015 data. The report offered a landscape analysis of the mainstream capital market ecosystem and the views and practices of its key stakeholders around the issue of long-term value creation. Since then a lot has changed. The role of investors in proactively shaping corporate practices is gaining more attention as environmental, social and governance issues (ESG) and responsible investment become mainstream, new responsible investment-focused regulations and frameworks have been implemented and shifting demographics are putting pressure on capital market stakeholders to change their practices. There have also been some counter-trends at play, challenging stakeholders from focusing more on long-term value creation.
The first section of this report explores some of the key drivers of change between 2015 and 2018. The second section of the report focuses on each of the different capital market stakeholders, exploring the key changes that have occurred since 2015, what is driving the change and what the barriers are to further progress. For most groups, the same sample of organizations and indicators were used to aid the comparison as a baseline and some additional indicators and organizations were also included where relevant. An additional stakeholder group was also added for this year: Index Providers and Exchange-Traded Funds.
The desk research involved collecting publicly available information from company websites, company reports (annual reports, sustainability reports), Principles for Responsible Investment Transparency Reports, industry reports and academic literature.