New York – Asset 4, a respected ESG research provider with presence in the US, has provided an insightful response to one of our recent articles where we analyzed the status of ESG research in Europe in comparison to the one in the US. The reader’s response deserves further comment as it presents a perceptive “different picture” from the one we painted (and still believe to be coherent with our own observation and data), where we state that the US interest in ESG research is still behind the one in Europe.
In response to our view that “the demand for ESG research in the US is still lagging behind Europe,” our reader has presented us thoughtful arguments and sources indicating that ESG research in the US has strong traction (find our reader’s response at the end of this article). The accuracy of this statement is well known. Besides the four arguments raised by our reader supporting the growth of ESG research in the US, we can add that our own database shows that the number of ESG research firms inserted in the US has not been stagnant since the late 90’s. Furthermore, own experience in the research industry indicates that US investors are having growing interest in ESG research.
The existing ESG research firms in the US have acquired respectable levels in the quality of their research, especially in the governance area. In addition to Asset 4, US providers such as KLD, Innovest, and Riskmetrics, among others have strongly positioned themselves in the research space attracting a number of investors.
We believe that our reader’s “different picture” is accurate: US interest in ESG research is growing. However, we still see a lagging behind Europe in this respect. Our reader argues that according to the Social Investment Forum, in the US $1 out of every $9 is allocated to socially responsible investment. We would like to point out that according to the same source, in 1995 the ratio was $1 out of every $10. Needless to say, the improvement in the past 13 years has been less than small. Meanwhile, European responsible investments grew from $1 trillion Euros in 2005 to $1.6 Euros in 2007 – 60% in only two years.
Some have argued that the investment culture has led European investors to bear ESG issues as a priority while US investors caress profit over such issues. Lacking primary sources to measure investment culture in the US and Europe we limit our comments to our own experience and our proprietary database which includes research providers across the board and the map. As mentioned in the article commented by our reader, our data indicates that Western Europe surpasses the US in the amount of research providers created in the last decade. Also, the old continent surpasses the US in the amount and robustness of networks, grassroots movements, and legislative tools surrounding ESG issues in general, and ESG research in particular. Multiple examples can be provided of visionary efforts and measures adopted in Europe, while the US is still discussing about it. Such examples constitute enough material for writing a book on the topic, but consider for now REACH and ROHS, two EU legislative measures in place since 2006, which enforce environmental rules and precautionary principles.
The debate is open and we appreciate further comments regarding the crucial issue of ESG research in Europe and the US.
ASSET 4 Response to Integrity’s article
Below are just a few points that we believe present a different picture regarding US interest in ESG than your recent research piece.