Two-thirds of the world’s most influential asset managers now say their board and trustees are accountable for overseeing responsible investment issues, according to the latest research from ShareAction.
The UK-based charity said the figure has leapt from just 21% in 2020, although it warned that boards need more training on climate.
The findings come as part of ShareAction’s biannual ranking of the responsible investment practices of the investment industry.
It asked 77 large investors from across the globe to answer 107 questions on their approach to governance, stewardship, climate, biodiversity and social issues. 13 declined to participate, including NN Investment Partners and PGGM – both considered leaders in sustainable investing, and both of whom “lost significant ground” in the ranking compared with the 2020 results. ShareAction used public disclosures to fill out those surveys.
NNIP and PGGM did not respond to requests for comment on their refusal to participate in the assessment. Since the last survey, NNIP has been acquired by Goldman Sachs Asset Management (GSAM).
None of the 77 managers received the top ‘AAA’ score, and only Robeco, BNP Paribas Asset Management, Aviva Investors and Legal & General Investment Management bagged an ‘A’ or ‘AA’.
The report noted a drop in the number of investment houses receiving both the highest and lowest scores.
Alongside NNIP and PGGM, the investors that took the biggest tumble down the rankings since 2020’s survey were State Street Global Advisors, PIMCO and Allianz Global Investors.
“Rather than evidence of their performance deteriorating, it is likely that the five have simply not kept up as standards have improved across the sector since 2020,” suggested ShareAction.
The biggest climbers were Deka Investment, JP Morgan Asset Management, Santander Asset Management, SEB Investment Management and T. Rowe Price, who all moved at least 30 places up the ranking (JP Morgan improved by 60 places) due to improved policies, stewardship practices or climate investment frameworks.
While ShareAction said JP Morgan’s ascent, alongside high scores from $1trn+ managers AXA, LGIM and Schroders, showed “size is not a barrier to progress on responsible investment issues”, most of the world’s biggest investors still scored poorly.
The 35% of managers with the lowest scores (D or E) control $38trn – half of the total assets under management of all 77 – and include BlackRock, State Street, Vanguard and Fidelity Investments.
BlackRock told IPE the assessment did “not take into account the fact that our clients invest with BlackRock in pursuit of their long-term financial goals and that, as stewards of their assets, our role is to help them achieve these goals.”
A spokesperson for Vanguard said clients who want to align their investments with ESG preferences can opt for their labelled funds.
State Street and Fidelity did not respond to requests for comment.
“Most managers had some better and worse performing areas, highlighting where much progress needs to be made,” said ShareAction. “But some showed consistently poor approaches to responsible investment. Six of the survey respondents were outside the top 50 in every category: E Fund Management, Franklin Templeton, Mitsubishi UFJ, State Street GA, Vanguard, and Vontobel AM.”
As well as a boom in the level of board accountability for responsible investment topics since the 2020 study, the research showed a jump in asset managers with climate policies from 56% to 82%, although far fewer have published a net zero target (53%) or a climate transition plan (22%).
And while the number of asset managers with social policies rose from 53% to 81% over the two-year period between surveys, nearly a fifth (19%) said that social issues were only an investment consideration for strategies that had ‘ESG’ or ‘responsible investment’ labels.
North American managers showed “markedly stronger performance” on social issues compared with climate, ShareAction noted.
Over half of the asset managers said they had sold down holdings or withheld debt as part of an ESG engagement process.
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