The environment, and particularly climate change, is the top financial concern of asset owners across North America in 2024, even though social and governance issues were also weighing more heavily on owners minds, an annual survey on ESG and other issues out this week from Morningstar finds.

Globally, 64% of asset managers in the U.S. and Canada feel that environmental factors have become more material, or financially relevant, over the past year, up from 52% in 2023. Social, which had the largest gain this year, was at 58% in 2024, up 20 percentage points from last year, while governance (55%) gained 12 percentage points, the same increase as environment.

Those numbers are in line with what asset managers in Europe and the Asia-Pacific region are saying. That trend has occurred even though in the U.S. a number of states have pushed for investors to ignore ESG factors.

“It’s instructive for all investors to understand asset owner thinking because it influences asset managers and the companies they invest in, and these investment practices spill over into funds available to retail and wealth investors,” wrote Thomas Kuh, head of ESG strategy at Morningstar Indexes, in a story on the company website about the survey results.

Morningstar surveyed 500 global asset owners representing more than $18 trillion in assets to gain insights into investment policies, perspectives on regulatory change, their key stakeholders and influencers, and the role of environmental, social, and governance factors and approaches in their investments.

The “Morningstar Voice of the Asset Owner Survey” provides an annual snapshot of what makes asset owners tick, what drives their behavior and what keeps them up at night. Asset owners are investors who lead investment strategy for a range of institutions including pension funds, insurance company general accounts, foundations, and endowments.

They play a prominent role in the financial system as stewards of large blocks of capital. A recent Thinking Ahead Institute report estimates that the seven largest pension markets alone control over $50 trillion in assets.

Given the urgency of tackling climate change, it is not surprising that asset owners view the transition to net zero emissions as the environmental factor most material to their decision-making (55%), up from 52% in 2023, followed by energy management (49%), up 9 percentage points from 2023. New to the list of top three issues is water & wastewater management (33%), replacing sustainable food/agriculture, which ranked third in 2023 at 33%.

One reason for the climate focus is that data quality, availability, and consistency for environmental factors were perceived as much better than those for social and governance factors. “Climate is the lead and that’s because the data that’s available is better,” one U.S. corporate pension fund told survey researchers.

The top social issues for 2024 were labor practices, including employee health care, and human rights and community relations. The top governance concern was business ethics, followed by risk management.

Read more: ESG data is getting more reliable, asset owners say.