Chris informed the audience of the results of State Street’s recent Institutional Investor Survey that confirm that ESG is becoming mainstream, with close to 80% of investors using ESG components within their investment strategy and an overwhelming majority believing that ESG drives long-term returns. However, although the conviction for ESG integration remains strong, Chris noted that the depth of integration practice remains shallow for all but small group of investors. In fact, more than three quarters of investors indicate that less than half of their assets have exposure to ESG strategies.
The global risk landscape, as illustrated by the evolution of the World Economic Forum’s Global Risks Report, is a key driver of ESG integration. Chris noted that, over the past 10 years, there has been an increasing number of environmental, geopolitical and social risks listed within the top 5 global risks in terms of likelihood and impact. Another driver is ESG related regulation that has increased substantially in the past 10 years. Finally, Chris stressed that economics will continue to drive ESG integration. This is illustrated best by the staggering figures related to board diversity that suggest that equal representation within companies would add 28 trillion to global GDP by 2025.
Chris described State Street’s support of female leadership, discussing the fearless girl statue and the firm’s corporate engagement initiatives with the over 700 public companies who did not have a woman on the board: as a result of State Street’s and similar efforts, over 150 companies recruited a woman director and an additional 34 companies are committed to enhancing board quality.