ESG has grown in importance to investors in the past year, research suggests.
Morningstar found over two-thirds (67%) of 500 asset owners that responded to its survey reported that ESG has become more material in the past year, with 42% of their $18 trillion in assets now incorporating ESG considerations—an increase of four percentage points since 2022.
Europe leads this shift, with ESG integration rising from 36% in 2022 to 45% in 2024.
Thomas Kuh, head of ESG strategy at Morningstar Indexes, noted that while climate remains a top priority for asset owners, other areas of ESG—particularly Social and Governance factors—are gaining traction.
“ESG materiality is broadening and deepening, driven by the compounding effects of financial materiality and fiduciary duty,” said Kuh. “Active ownership, particularly direct engagement, remains a cornerstone of effective ESG strategies.”
The survey also found that fiduciary duty continues to be influenced by ESG, with 53% of asset owners recognising ESG’s alignment with their fiduciary responsibilities. Larger asset owners, particularly those with AUM exceeding $10 billion, are more likely to consider both financial and societal impacts in their investment decisions.
One of the notable shifts in ESG market maturity is the growing demand for more granular and accurate ESG data. When asked to prioritise between data, ratings, or indexes, 43% of asset owners ranked ESG data as the most valuable tool for implementing their strategies. Moreover, many respondents expressed enthusiasm for the potential of artificial intelligence to enhance ESG data provision, with more than 70% anticipating AI-driven innovations in data collection and analysis over the next five years.
The findings are in Morningstar’s third annual Voice of the Asset Owner survey and respondents ranged across 11 countries.
