Two-thirds of UK fund managers are reducing investments in companies that fail on diversity and inclusion scores, according to a survey by Edelman.
The firm's annual Investor Trust Barometer Special Report - which questioned 600 investment professionals - revealed 63% of UK investors say they their firms are actively applying exclusionary screening based on diversity and inclusion metrics, while 64% have started to put portfolio investments that do not meet their diversity and inclusion thresholds on ‘watch lists'.
Additionally, 87% of investors agree profitable companies should also take more responsibility to address ESG issues than companies that are underperforming.
Survey respondents suggested companies that score well on ESG metrics tend to be thought of as "better long-term investments" and "more resilient in a crisis", and therefore deserve to be valued at a premium to peers.
The majority (87%) of respondents also argued it is acceptable to launch a public activism campaign against a company in the current environment, with most agreeing they expect shareholder activism to increase as we recover from the pandemic.
Senior director and head of special projects Iain Dey said: "The overwhelming message that rings through loud and clear in the data is that investors are telling us that companies that score well on ESG metrics are just better companies that make for better long-term investments.
"Why? If you score well on ESG that means you treat your employees right, you pay more attention to things like health & safety risks as well as climate-related risks - meaning that your business is more resilient in a crisis, and more long-term in its thinking."