Callan's 10th Annual ESG Survey Shows 35% of Respondents Incorporating ESG into Investment Decisions, Down from a Record 49% in 2021

Lower public plans adoption was the biggest driver of the overall decline

SAN FRANCISCO, Nov. 29, 2022 /PRNewswire/ -- Callan, a leading institutional investment consulting firm, announced the results of its 10th annual ESG Survey, revealing that 35% of respondents incorporate environmental, social, and governance (ESG) factors into investment decision-making. This marks a decline from a 49% in 2021, which saw the highest rate of ESG adoption in the survey's history.

Key Findings:

• The survey found 35% of institutional investors incorporated ESG factors into investment decisions, representing a 14 percentage point decrease from 2021.
• 53% of foundations incorporated ESG, the highest adoption rate in 2022. Endowments and foundations typically have had the highest adoption rates since the survey's inception in 2013.
• 50% incorporated ESG to meet their fiduciary responsibility.
• 20% of respondents not yet incorporating ESG were considering doing so.
• 75% of those that incorporated ESG considered ESG factors with every investment/manager selection.
• 47% of respondents that did not incorporate ESG indicated it was because they believed the benefits were unproven or unclear.
• The decline in ESG adoption for public plans from 63% to 24% was the biggest driver of the overall decline in 2022.

"The level of interest and debate about ESG has never been more intense in the U.S.," said Tom Shingler, senior vice president and ESG practice leader at Callan. "While there are a number of asset owners incorporating ESG at increasingly complex levels, there is federal regulatory uncertainty and differing ESG policies across states and their pension systems — which have led to confusion and inaction in some cases. Additionally, there is backlash against ESG from some stakeholders who question its contribution to investment outcomes, while other stakeholders demand increasing levels of ESG incorporation."

The survey was conducted in May and June 2022, and reflects input from 109 unique U.S. institutional investors on their approach to ESG factors when evaluating investments. The survey includes responses from public and corporate defined benefit and defined contribution plans, as well as from endowments and foundations. Respondents also represented plans of all sizes, ranging from small (<$500mm) to large (>$20bn). Callan is not able to survey all of the same respondents every year, contributing to variance in results. The survey participants include Callan clients and non-clients.

Find the summary blog post and full survey here.

Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises on more than $3 trillion in total fund sponsor assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.

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Elizabeth Anathan 
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SOURCE Callan LLC