We conducted an investor survey to better understand how investors today are incorporating ESG into their decision-making. The results highlight two key findings: first, experienced investors regard ESG integration as fundamental to risk management and long-term financial performance. Second, while climate change and energy transition remain a priority, there is also a growing focus on biodiversity as an investment theme.

Explore the key insights from our survey below.

Finding 1: ESG is not just an option— it’s essential

In today’s market, ESG has become indispensable for investors, particularly those with a long track record of ESG integration. Our survey indicates that 71% of investors who have incorporated ESG criteria into their investment processes for over seven years believe that doing so leads to increased risk-adjusted returns.

In your opinion, how does incorporating ESG criteria into an investment process affect risk-adjusted returns?

The strategic importance of ESG is evident as investors increasingly factor it into the selection of alternative investment managers. ESG’s role in identifying risks, driving operational efficiency and ultimately generating long-term performance makes it a fundamental consideration in portfolio construction.

When appointing alternative investment managers, how relevant is ESG to your decision-making?

Finding 2: Climate change and energy transition remain a top priority, while the focus on biodiversity is increasing

Climate change and energy transition remain at the forefront of ESG considerations. However, there is also an increasing focus on biodiversity. This shift reflects a deeper awareness of the need for sustainable solutions that protect ecosystems and the long-term investment opportunities they represent.

What are your most important environment topics?

ESG integration has entered a new and more complex phase. The previous consensus among investors about its importance has given way to a landscape where some stakeholders are pushing forward with ambitious ESG-related investment goals, while others are adopting a more measured approach. The insights from our investors are invaluable, offering a clearer view of the shifting priorities within the institutional investor landscape.

At LGT Capital Partners, we understand that advancing ESG in this dynamic environment requires sustained, real-world engagement and a commitment to incremental, year-on-year progress. Building truly sustainable portfolios is a long-term endeavor – one without a definitive endpoint. By continuously enhancing our ESG practices, we seek to create lasting value for our investments, positioning them thoughtfully in a changing global landscape.

For more insights into how we and our managers incorporate ESG into our portfolios, please download the full ESG Report 2024 here.

Methodology

In summer 2024, LGT Capital Partners asked more than 100 global institutional investors based in Europe, Asia Pacific and the United States to understand how they incorporate ESG factors into investment decisions. After the initial questionnaires in 2018 and 2021, 2024 marked the third edition of our survey, allowing us to make comparisons and identify where and how views may have shifted over the last years.