On the go: About 90 per cent of asset managers discuss environmental, social and governance factors in meetings with senior management of the companies in which they invest, up from 80 per cent in 2018, according to research from Russell Investments.
The study found that asset managers are placing greater emphasis on active ownership of their investments, and are increasingly engaging with them on ESG issues.
More than a third (35 per cent) of the 369 asset managers quizzed for Russell’s 2021 ESG Manager Survey said they always cover ESG in their meetings with senior management, up from just over a fifth (21 per cent) in 2018.
Sixty per cent of respondents said they hear from clients about climate risk/environmental issues more than any other issue, while a fifth (20 per cent) said clients engaged most with them about diversity and inclusion/social issues.
Four-fifths (80 per cent) of asset managers ranked ‘governance’ as the most important ESG factor that impacts their investment decisions, while 14 per cent said ‘environmental’ was most important to them — an increase from just five per cent of respondents in 2018.
‘Social’ was ranked as the most important ESG factor by just 6 per cent of respondents, according to Russell’s survey.
It found that social issues such as diversity, equity and inclusion, healthcare availability, and affordable housing received greater attention during the Covid-19 pandemic. However, because social factors are harder to quantify, there are few investment opportunities tied directly to these issues.
The survey also found that four in five (80 per cent) of the managers surveyed are incorporating ESG-specific considerations into their investment activities, with every UK manager surveyed saying they now integrate ESG into their investment processes.
With ESG factor integration becoming more popular, companies have invested in dedicated professionals who will focus most of their time on ESG matters. In Europe, 88 per cent of asset management firms have dedicated ESG professionals, compared with 63 per cent of UK companies.
Jihan Diolosa, head of responsible investing at Russell Investments, said: “In last year’s study, we noted that ESG is no longer an optional ‘add on’, but rather an essential part of decision-making. Asset managers have certainly taken this to heart, which is reflected in the improvements we have continued to see over the past 12 months.
“With climate change in particular becoming such a critical issue, managers will have to demonstrate a clear focus and active efforts to make improvements in this area or risk being left behind.”
