Passive Investing 2021: Rise of the social pillar of ESG

4th Edition Create Report

We have partnered once again with CREATE-Research for a fourth annual Passive Institutional Investing survey of pension funds globally. When last year's report was launched, the world was in the early stages of trying to get to grips with the global pandemic. As this year's report comes out, there is light at the end of the tunnel. Vaccine roll out is well under way, and the hope is that the protection they afford will allow for some kind of return to normal.

In this context, the key theme of this year's report, the 'S' pillar of ESG (environmental, social and governance) investing, is highly pertinent. As politicians and policy makers across the world aim to 'build back better', we as an investment community need to take the time to fully understand the social part of ESG. We live in an age where the politics of inequality and 'social justice' cannot be seen as external to the investment process.

More than 140 pension funds in 17 jurisdictions across Europe, USA and Asia Pacific, representing 2.1 trillion EUR in AuM, have contributed to the report’s findings. The survey was supplemented by 40 interviews with senior pension executives.

Selected key points from the survey

  • 36% of pension funds surveyed seek to manage hard-to-model fat-tail or far off risks by investing in the 'S' pillar
  • 66% plan to increase their investment to 'S' pillar passive funds over the next three years
  • 63% will choose their index manager on the basis of their track record on delivering on their client's social agenda

Order the fully study here

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