Sustainable investment : factors influencing the adoption of a sustainable investment strategy : examining how different factors influence the adoption of sustainable investment strategies.

Abstract

With the growth of ESG investing across the finance industry, this paper seeks to explore how different factors influence the adoption of a sustainable investment strategy, with a predominant focus on large asset managers. This study aims to fill the theoretical gap between practitioners and academics on what motivates asset managers to engage in sustainable investment in addition to exploring the barriers they face, factors integral to their success, the strategies they use to invest and opinions on the future of sustainable finance. Using a content analysis of survey responses and interviews with senior individuals who work at large funds in Canada, the United States, the United Kingdom and Hong Kong, the results show that the primary motivations for engaging in sustainable investment are that it 1) adds comprehensiveness to the investment decision process, 2) mitigates investment risk and creates opportunity for long-term risk-adjusted returns, and 3) satisfies stakeholder/client demand and fulfills perception of fiduciary duties. Based on the results, this paper indicates that investment managers may want to pay further attention to developing their sustainable investment strategy in order to achieve a competitive advantage in the market.