Asia-Pacific investors cite concerns about a lack of robust environmental, social and governance (ESG) data (45%) as a key obstacle holding back their organizations from further adoption of ESG, according to a recent global study.

The study, by investment firm Capital Group, which has assets under management of US$2.6 trillion, surveyed 1,040 global institutional and wholesale investors, including pension funds, family offices and insurance companies, as well as fund of funds, retail and private banks, and financial advisers, located across 16 different countries.

Among these investors, close to 29% are based in Asia, principally in Hong Kong, Singapore, Japan, South Korea and Australia. The study sought to identify the key drivers behind how these professional investors are integrating ESG into their operating models and where the challenges lie.

Asia-Pacific investors identify concern about the lack of robust ESG data as one of the main barriers to ESG adoption (45%), attributing a similar level of importance to the issue as global respondents. Almost half of Asia-Pacific investors (46%) also agree that a lack of product innovation is holding back greater adoption of ESG, as compared with 35% of global respondents.

Some 46% of Asia-Pacific investors say a lack of consistency in ESG scores from ratings firms is a stumbling block when incorporating research data into their investment decision-making process. More than a quarter of respondents in Asia-Pacific (29%) and globally (27%) rank difficulties accessing the information they need as the leading challenge they face when implementing ESG investments.

“ESG is an increasing area of focus for institutional and wholesale investors globally,” says Jessica Ground, Capital Group’s global head of ESG. “While investors appreciate the importance of ESG integration – and qualitative analysis and engagement by active fund managers – they also report that the lack of robust and consistent data is the main challenge when investing in ESG. It’s understandable that as ESG becomes more important to these investors, the desire to be rigorous in their assessment of ESG grows.”

To the question of what would enhance their organisations’ focus on sustainable investing, about four in 10 investors globally (43%) say consistent reporting is the top driver for better ESG analysis and implementation. This is closely followed by greater cross-industry analysis of ESG factors in portfolios and automated analysis tools, such as artificial intelligence, which would be welcomed by more than a third of investors (37% and 34%, respectively).

When considering how asset managers can most effectively engage investee companies on ESG, more Asia-Pacific investors found having regular meetings with senior executives at investee companies (56%) important, compared with their global peers (46%). And 55% of Asia-Pacific investors also pointed to monitoring and reporting to assess outcomes and progress as key engagement tools, compared with 45% globally.