ESG Survey Report on Asset Managers
Russell Investments released an ESG survey report on asset managers, aiming to understand the specific progress of ESG practices in the asset management industry and the concerns for investors. This is also the ninth edition of ESG survey report on asset managers released by Russell Investments.
A total of 169 asset management companies around the world are selected for this survey, with a cumulative management scale of nearly US$20 trillion. The assets held by the respondents include stocks, bonds, real assets, etc. Respondents ranged from large traditional asset managers to smaller firms specializing in ESG investing.
Related Post: Morningstar Releases Asset Owner ESG Survey Report
Asset Managers’ Perspectives on ESG
In terms of ESG investing, reducing investment risk (26%) and increasing investment payback rate (19%) are the most common reasons. Some investors also mentioned the impact of regulatory policies (19%), climate change (19%) and social risks (15%) on the implementation of ESG strategies. Only 7% of respondents believe ESG plays no role in investment decisions. Overall, the implementation of ESG in the investment field has become an essential trend.
In the past year, 23% of the respondents have established a separate ESG team, 10% have established an ESG data integration team, and 9% have established an engagement team (responsible for activities such as proxy voting). Other aspects of ESG investment include establishing equity teams (7%), climate teams (5%), bond teams (5%), etc.
Asset Managers’ Perspectives on Net Zero Investments
As ESG and sustainable investing grow, asset managers have also made progress in net-zero investing. 27% of respondents have already joined net zero alliance, and a further 26% plan to become a signatory in the next twelve months. The adoption of net zero investment is related to the region where the respondents are located. 80% of European investors have started net zero investment, while only 20% in the Americas.
While the scope of net zero investments continues to expand, most investors have a small share of net zero assets. 26% of the respondents’ net-zero assets account for less than 10% of their total assets, and only 14% of the respondents hold more than 75% of their net zero assets. Two-thirds of respondents said they planned to hold more than 50% of net zero assets by 2030.
Asset Managers’ Perspectives on ESG Disclosures
At the request of regulators, customers and other stakeholders, asset management companies continue to increase ESG information disclosure. 66% of respondents provide ESG information disclosure for all financial products and strategies (up from 59% in 2022), and 10% provide disclosure for ESG financial products and strategies (up from 29% in 2022).
In terms of common disclosure indicators, carbon emissions (56%), ESG external scores (37%) and ESG internal scores (30%) account for the highest proportions, and the rest include diversity (24%) and transformation indicators (20%).
Asset Managers’ Perspectives on ESG Challenges
Regarding the challenges faced in implementing ESG investments, many interviewees believe that it is difficult to meet the interests of different customers, and ESG investments may reduce the choice of investees. Unclear ESG impacts and valuations also become concerns for asset managers.
In addition, the lack of ESG data and lack of an information disclosure framework for investees are also major factors affecting the implementation of ESG strategies by asset management companies. In terms of ESG risks, climate risk and environmental risk account for the most important positions (accumulating to more than 60%), and diversity risk and social risk were also mentioned by respondents.
Asset managers are proactively addressing these risks. When it comes to board diversity, with only 17% not disclosing this data (compared to 37% in 2022). Equity investing offers the greatest diversity when it comes to different asset classes.
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