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Laxman Pai, Opalesque Asia:

When it comes to ESG, environmental issues remain the most prominent among institutional investors in Europe with many looking to deepen their ESG investment focus over the next year.

Asset allocation research among 850 institutions with €1 trillion of assets showed that environmental issues still dominate when it comes to ESG for institutional investors in Europe, though social and governance factors are catching up.

According to Mercer's European Asset Allocation Insights report released, in total, 76% of plans in the survey considered ESG risks but there was considerable variation by country. Swiss plans were "laggards", but all Belgian participants considered ESG risks in their plans.

While 85% of institutional investors told Mercer that regulatory drivers were their key motivator for considering ESG risks in investment decisions in 2020, just 67% said the same this year.

"The survey indicated that investors are moving from a more reactive position to a proactive one, with regulatory drivers decreasing in significance as a motivator for considering ESG risks," said the firm.

Mercer found that 27% of respondents plan to increase attention to social factors such as human capital and labor rights issues over the next year. On environmental issues, 24% of asset owners said they will deepen their focus on such things as biodiversity and natural capital.

On governance, 53% of investors plan to learn from the pandemic by revi......................

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