Asset owners across the globe are no longer so worried about the availability and quality of ESG data, leading many of the largest firms to expand their sustainable investing programs, a report out this week shows.

FTSE Russell, the global index provider, said its 2024 survey of asset owners worldwide found just 22% saying ESG data availability was a top concern, down by more than half from the 50% who said so in 2022 and 2023. That ranked data concerns as the sixth most significant barrier to the adoption of sustainable investing programs.

Instead, the No. 1 concern of asset owners has become the ability to align portfolios in accordance with regulators’ SI/climate guidance, with 51% citing that as the biggest impediment.

“Sustainable investment remains a major focus area for asset owners globally while contending with significant regulation and challenging market conditions,” said Stephanie Maier, head of sustainable at FTSE Russell. “The top challenge for asset owners is now focused on the implementation and portfolio alignment with sustainable and climate objectives.”

Concerns over the lack of standardization in ESG data, scores and ratings also fell from the second to the eighth most important barrier — 37% in 2023 to 20% cent in 2024.

While the report found fewer firms overall implementing and evaluating sustainable investment plans in 2024 — 74% versus 80% in 2023 — the decline was largely among smaller asset owners who may find the regulatory hurdles more burdensome than their larger counterparts. Eighty-six percent of large asset owners were implementing or evaluating sustainability programs versus just 63% of smaller firms.

The most significant barriers to increased sustainability investing adoption among asset owners have shifted to resources, methodology and strategies, the report found.

Almost two in five (39%) asset owners state that concerns about SI methodology are the biggest barrier to increased adoption across all asset classes, a rise from 18% in 2023. And 25% of asset owners said that questions about how to determine the best strategy or combination of strategies for their portfolio is a key barrier to SI adoption, rising from eight percent in 2023.

“As confidence in available SI data grows, the types of strategies asset owners are choosing are evolving. There has been a meaningful and sustained shift towards passive SI strategies, which are now directionally overtaking active ones for the first time,” said Fiona Bassett, CEO at FTSE Russell.

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