On the go: Asset managers are not living up to their environmental, social and governance commitments, research from Redington has found, with shortcomings in stewardship and engagement prominent.
Yet progress is being made in some areas, with responsible investment policies and initiatives such as the Principles for Responsible Investment becoming normalised.
As part of Redington’s annual Sustainable Investment Survey, 112 asset managers from across the globe were questioned on their ESG integration, engagement and policies, amongst other factors.
Responsible investment policies have now become the norm, with 99 per cent of surveyed managers stating they have these in place, while the number of companies that completed Task Force on Climate-related Financial Disclosures reporting also rose, to 45 per cent in 2021 from 28 per cent in 2020.
However, the survey identified several areas where managers are still to make meaningful progress.
It found that while more than 90 per cent of respondents stated that they integrate ESG considerations into their fundamental research, only 74 per cent and 61 per cent of asset managers could evidence ESG considerations influencing respective buy or sell decisions over the past six months. This is despite 78 per cent of respondents stating they expect ESG integration to have an additive impact on financial performance.
Paul Lee, head of stewardship and sustainable investment strategy at Redington, said: “Given that almost all asset managers, across most asset classes, indicate that ESG factors influence their investment decisions at least sometimes, we would like to see these words being backed up more substantially by investment actions.
“Setting policies and processes is just the beginning. What’s really needed to further the sustainability agenda within the asset management community is a tangible link between ESG analysis and investment decisions.”
An increased emphasis on thoughtful, results-oriented stewardship was identified by the research, with 83 per cent of respondents having a company-wide stewardship and voting policy, covering more than 88 per cent of assets under management.
However, Redington again found evidence that such progress on policies was not always being backed up by tangible actions. Of the asset managers who stated that they had a stewardship and voting policy that covered all of their AUM, only 44 per cent voted on all resolutions. Almost 10 per cent did not exercise any voting rights at all.
The research also uncovered a disparity in the quality of engagement between asset classes.
While more than 60 per cent of real asset engagements were considered deep engagements, only 15 per cent of equity engagements were approached with the same thoroughness.
Nick Samuels, head of manager research at Redington, said “Engagement is an incredibly powerful catalyst for positive and sustainable change.
“While it’s encouraging to see indications of a high level of thoughtfulness on the part of real asset managers, we would expect a higher proportion of deep engagements across equity strategies, too — especially given the asset managers’ level of influence as shareholders.”
