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Sustainable and Impact Investing 2022: Insights and Perspectives

Madeline Clark, Ellie Bentley

Overview

  • Of the 144 Cambridge Associates clients that responded to the 2022 survey, 93 reported engaging in sustainable and impact investing (65%)—up 4 percentage points relative to 2020 and a significant increase of 29 percentage points relative to our 2018 survey results.
  • Foundation and college & university respondents have the highest rates of integration of sustainable and impact investing at 73% and 69%, respectively. Families and high-net-worth individuals were surveyed for the first time this year, and just over half (52%) are engaging in sustainable and impact investing.
  • Institutions that do not engage in sustainable and impact investing mainly cited that their mission is solely addressed via programmatic/philanthropic activities or perceived negative impact on financial performance. However, over 40% of these institutions anticipate engaging in sustainable and impact investing within two years.

Investment Structure

  • The ways in which responding institutions incorporate sustainable and impact investing most often include: developing an Investment Policy Statement (IPS) that integrates SII priorities, principles, and decision criteria; engaging with advisors to implement; and informing their investment managers that SII/ESG is important.
  • More than half (55%) of the institutions implementing SII strategies have more than 5% of their long-term investment pool allocated to sustainable and impact investing. Over the past five years, 88% of the respondents reported they increased their allocation to sustainable and impact investing. And importantly, approximately 90% of respondents reported plans to increase their allocation to sustainable and impact investing over the next five years.

Implementation Strategies

  • Institutions continue to employ a range of strategies to achieve SII objectives, including ESG integration, impact investing, negative screening, and program-related investments. Impact investing rose significantly over the last two years, while ESG integration and shareholder engagement also slightly increased. There was a shift away from negative screening as a commonly selected strategy.
  • Climate change and resource efficiency is the most common thematic focus area, followed by diverse manager investing and social and environmental equity.
  • Close to two-thirds of institutions engaging in sustainable and impact investing consider social and/or environmental equity in investment decision making. An additional 17% of respondents anticipate considering these factors in the future.