Climate change, governance and supply chains have been highlighted as the top ESG priorities for institutional investors in 2021, according to a survey by Bank of America Global Research.
The survey of nearly 70 institutional investors found that over 60% of firms see climate change as a main focus for the year ahead, with 50% stating they would be concentrating on renewables and green energy.
Social issues, such as diversity and community engagement, saw less than a quarter of respondents viewing it as a key focus.
In terms of managing financial risk, over 80% of firms saw governance as the most important factor.
With regards to the biggest opportunities for improvement within ESG investing, the oil and gas industry, as well as Asia, came out on top.
Nearly half of the global institutions who took part in the survey believe that oil and gas has the largest scope for improvement, while 41% said Asia offered the biggest opportunities for outperformance from ESG improvement.
However, the majority of respondents said that ESG integration is still in its early stages, believing that less than half of global investors are yet to implement it, while private markets were viewed as particularly lagging in the field.
That said, nearly 80% of respondents already use internal research to identify material ESG risks, alongside third party research. The number one ask from companies was to standardise corporate disclosure, BofA said.
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