ESG Incorporation by Money Managers

Using the US SIF Foundation’s modified methodology, this report identified 349 money managers and 1,359 community investment institutions incorporating ESG criteria into their investment decision-making processes across a total of $5.6 trillion in assets under management.

Figure C provides a breakdown by investment vehicles¹:

• $1.2 trillion—22 percent— in assets were managed through registered investment companies such as mutual funds, exchange-traded funds, variable annuities and closed-end funds.
• $762 billion—14 percent— in assets were managed through alternative investment vehicles, such as private equity and venture capital funds, hedge funds and property funds.
• $458 billion in assets were managed by community investing institutions.
• $186 billion in assets were managed through other commingled funds.

Fifty-three percent of the total assets reported by 135 money managers using specific ESG criteria could not readily be categorized by investment vehicle type, such as mutual fund or private equity fund, because those managers did not provide adequate disclosures. These “Undisclosed Investment Vehicle Assets” therefore constitute a pool of $3 trillion in reported ESG assets under management, as shown in Figure C.

Figure D, at top of page shows the leading ESG criteria reported by money managers:

• Climate change is the most important specific ESG issue reported by money managers in asset-weighted terms, addressed across $3.4 trillion in assets.
• In terms of other environmental criteria, money managers reported applying fossil fuel divestment policies across $1.2 trillion in assets, ranking it as fourth among all specific ESG criteria.
• Avoidance of military / weapons and tobacco are ranked as second and third, affecting $1.8 trillion and $1.7 trillion in assets under management, respectively.
• The leading specific governance criterion is anti-corruption, addressed across $1.0 trillion, followed by board issues across $926 billion in assets under management.
• Human rights are the most prominent social issue in asset-weighted terms, addressed across $987 billion, followed by equal employment opportunity (EEO)/diversity across $765 billion, and health and safety across $701 billion in assets under management.

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