Dive Brief:
- The percentage of asset owners incorporating sustainability considerations into their investment strategies has risen from 73% in 2025 to 84% in 2026, and another 15% are evaluating whether to incorporate them, according to the most recent edition of the London Stock Exchange Group’s asset owners survey, released last month.
- More than half (51%) of asset owners surveyed now take sustainability into account with more than 50% of their assets, up from 26% last year. Eleven percent of owners say they manage 100% of their portfolio this way, up from 0% of owners in last year’s survey.
- Eighty-five percent of surveyed asset owners expect to increase their consideration of sustainability factors in investment, or expand their use of sustainable investment products, in the next one to three years. No respondents said they anticipate decreasing their consideration of sustainability factors.
Dive Insight:
Sustainable investment gained traction in 2021 and 2022, but engagement then decreased from 86% in 2022 to 74% in 2023 and 71% in 2024, according to LSEG’s report. The decline in engagement was driven by geopolitical backlash and revisions to sustainability investment and disclosure regulation, Lee Clements, Head of Applied Sustainable Investment Research at FTSE Russell, LSEG’s global index provider, said in emailed comments to ESG Dive.
However, from the results of this year’s survey, sustainable investment seems to have bounced back, with sustainability “becoming a broader part of mainstream investment processes,” such as its effect on risk and return, Clements said. Forty-seven percent of respondents this year said they are pursuing sustainable investment to improve portfolio returns, up from 41% in 2025, while concerns about financial performance fell from 27% last year to 19% this year.
LSEG surveyed 402 asset owners across 24 countries, spread across North America (30%); the Asia Pacific region (30%); and Europe, the Middle East and Africa (40%). Respondents were senior members of sustainability, investment, or management teams for pension funds, insurance companies, government or sovereign wealth funds, and endowments or foundations, managing $100 billion or more in assets (22%), $1 billion to $100 billion (48%) or less than $1 billion (30%).
Investors are also “seeing more tangible examples of sustainability considerations [such as] extreme heat events over the summer or the impact of the current energy shock on driving the energy transition,” Clements told ESG Dive.
More than half (52%) of asset owners surveyed are considering climate risk in how they spread investment across asset classes, up from 36% in 2025, per the survey. Thirty percent are pursuing divestment from high-carbon assets, up from 21% in 2025, while 60% are still pursuing engagement, down from 67% the previous year.
Asset owners are also grappling with new risks, the survey found. Twenty-five percent of survey respondents said they were worried about health and healthcare-related risks, 24% are concerned about technology and AI-related issues and 19% cited concerns about food security.
Governance, tax and shareholder rights emerged as the most commonly cited sustainability priority for asset managers, identified by 32% of respondents, up from just 18% in 2025. Recent “pressure on shareholder rights” and “potential regulatory proposals which could limit disclosure and the ability of investors to bring items to vote” are driving these concerns, Clements said.
In addition, “geopolitical and macro[economic] volatility and a potential down market could uncover any lurking governance issues in companies,” he added. LSEG also noted that asset owners cited governance issues at large AI companies as a concern in the report.
Asset owners said the biggest barrier to increased sustainable investment adoption is concerns about the quality of corporate reporting, cited by 33% of respondents, up from 31% in 2025. However, concerns about regulatory turbulence have dropped, with 36% now seeing it as a potential enabler of sustainable investment, up from 22% last year.
Going forward, “Stability of government policy and approach on sustainability will have an impact on adoption, as will the overall direction of the market and broader economy,” Clements told ESG Dive, as falling markets tend to make owners deprioritize sustainability concerns as they mitigate risk. AI adoption is also a major area to watch, as Clements said, “the biggest question” LSEG is getting is how the proliferation of data centers and AI infrastructure “will impact sustainability considerations.”
