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Asset managers make progress on ESG efforts but key areas for improvement still

New research from Redington shows that asset managers’ engagement and stewardship records are not keeping pace with their ESG commitments.

Recent research from Redington shows that despite important progress in several key areas, asset managers are still yet to truly walk the walk when it comes to their sustainable investment actions.

As part of its annual Sustainable Investment Survey, Redington questioned 112 asset managers from across the globe, covering 220 strategies and an aggregated $10trn in combined assets under management.

This year’s results include a number of key indications that asset managers have continued to improve the integration and consideration of sustainability factors within their operations.

Firmwide responsible investment (RI) policies have now become the norm, with 99% of surveyed managers stating they have these in place. The number of asset managers with dedicated RI headcount has increased meaningfully by 15% year-on-year. And, Redington believes more importantly, the number of firms linking remuneration to the integration of sustainability risks also increased by a fifth, now covering 70% of firms.

The number of firms who completed TCFD reporting also rose from only 28% in 2020 to 45% in 2021.

However, Redington believes there are a number of areas where managers are still yet to make meaningful progress.

The survey found that while more than 90% of asset managers state they integrate ESG considerations into their fundamental research, only 74% and 61% of asset managers could evidence ESG considerations influencing respective buy or sell decisions over the past six months.

This is despite 78% of asset managers responding to say they expect ESG integration to have an additive impact on financial performance.

Paul Lee, Head of Stewardship & Sustainable Investment Strategy, at Redington, commented: “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.”

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