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During the past several years, Cerulli has increased its research efforts focused on responsible investing—in particular the incorporation of environmental, social, and corporate governance (ESG) principles into the investment process of asset management and how asset owners themselves view ESG concepts. In 2019, Cerulli released three reports covering ESG-related innovation in the U.S., Europe, and Asia and how the evolution and often differing viewpoints on the topic are informing the decision-making processes of investors around the globe. This white paper examines how survey data from asset owners polled as part of Cerulli’s ongoing ESG research fits together with globalized efforts to stem the negative impact of climate change on investor portfolios through increased process monitoring, better documentation, and active ownership.

Our White Paper Uncovers These Key Trends

Scrutiny of Values

On a global level, asset owners, investment consultants, third-party allocators, and other service providers have increased both the quality and quantity of questions asked relating to their ESG practices. Consequently, overall scrutiny of the underlying core values of asset management firms is now more palpable than ever before.

Incorporation of ESG Principles

How institutional investors are incorporating ESG principles into their processes and the components they look for in manager selection serve as a valuable roadmap for the next decade—particularly in the context of broadly adopted, global environmental goals outlined by initiatives such as the Paris Agreement and the United Nations Sustainable Development Goals (SDGs).

Demonstration of Process

While asset totals and flows into products specifically designated as ESG-oriented have been modest, asset management firms aiming to establish and maintain global business must demonstrate that they have strong processes and decision-making characteristics that take ESG factors into account across the entirety of their product suites.

Notable "E" Developments Globally

The Carbon Bubble
The notion of a “carbon bubble” has gained traction over the past decade, spurring much of the regulatory movement and global climate initiatives introduced in recent years.

A push toward better disclosure practices gave rise to coalitions such as the:

  • UK-based Carbon Disclosure Project (CDP) in the early 2000s

  • The Portfolio Decarbonization Coalition (PDC) in 2014

  • The Task Force on Climate-related Financial Disclosure (TCFD)

Download the White Paper