Asset managers failing to translate ESG policy into action

Asset Managers, ESG, RedingtonAsset managers are struggling to evidence action on sustainability issues, as Redington research suggests 43% of managers are unable to provide an example of a sell decision driven by an ESG view in the past 12 months, compared to 39% a year prior.

The survey of 122 firms across Europe (14%), the UK (38%), the US (44%), and Asia (2%) collectively overseeing $37.7 trillion in assets, revealed 35% of managers also failed to evidence a buy decision motivated by ESG, compared to 26% last year.

Just 57% of respondents said they had an exit strategy for negative ESG performance.

Despite positive strides from investors regarding ESG policies and processes, there remains a notable lack of action, Redington argued, though it found encouraging signs that managers were continuing to strengthen integration and stewardship efforts.

The number of firms aligning remuneration policies with sustainable investment metrics fell to 62% – from 70% in 2021.

Across most asset classes, investment recommendations were being influenced by ESG factors, however, with 78% of equity managers and 84% of fixed income managers stating environmental issues impacted analyst recommendations.

Nick Samuels, head of manager research at Redington, said: “With climate change, the cost-of-living crisis and geopolitical uncertainty all at the forefront of our minds, the interconnectivity between the financial system, society and the planet are increasingly clear.

"For asset managers, being a responsible steward of capital means creating long-term value for clients and their beneficiaries – and one way to do so is through thoughtful engagement on material topics”.

Samuels explained that changing investment practices “on the ground” was crucial and that while it was “encouraging” to see managers progressing with processes and philosophies, there is still a long way to go in taking action for real-world outcomes.

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