On the go: Nearly a third of investment managers do not consider environmental, social and governance factors systematically across all asset classes, despite claims from the majority that they invest responsibly, according to a report from LCP.
Its latest Responsible Investment survey, which polled 137 investment managers about their approach to ESG factors and stewardship, the consultancy found there was still significant room for improvement among the 30 per cent of managers who do not exam ESG factors systematically as part of their investment process.
In many cases, one in four (23 per cent) managers also do not analyse portfolios’ aggregate exposure to ESG risks, which could lead to a dangerous concentration.
Actions to address climate-related risks have remained weak, despite the issues being a major concern for pension scheme members and government.
Of five specific climate-related actions – including systematic consideration, engagement and risk reporting before investment at security and strategy levels – investment managers said they undertake, on average, just 1.7 actions per asset class. In 14 per cent of cases, climate-related risks are not considered at all.
Claire Jones, principal and head of responsible investment at LCP, said: “The survey results around climate change considerations are particularly worrying, especially given the widespread pressure on institutions to respond to growing demands for a faster transition to a net zero carbon economy.
“Climate change poses both physical and transition risks that investment managers should be taking into account.”
