THE ROAD AHEAD

*Less conversation, more action*

THE ROAD AHEAD

Hear what our Head of Manager Research, Nick Samuels, hopes to see from the asset management community going forwards.

Perhaps it’s because I’ve just seen Baz Luhrmann’s new movie, but reading through the survey results, I hear the words of the King (Elvis, obviously) in my ears: A little less conversation, a little more action, please.

The asset management industry has signed up to the initiatives, made the promises, hired the staff and designed the processes, but when asked for signs of action, many respond with an awkward silence.

So, to help asset managers in their quest of a little more bite and a little less bark, a little less fight and a little more spark, we’ve put together an ESG checklist, which you can find on the following pages.

Nick Samuels

Head of Manager Research

We love to see it already happening:

◻ Clarity of firmwide commitment to ESG and its dissemination across investment teams and strategies.

◻ Expansion of dedicated resourcing and increased staff training.

◻ Recognition of the importance of climate change and increasing commitments to net zero (at least at the firm level).

◻ Increased understanding of the importance and applicability of stewardship across asset classes.

◻ Tailored integration and stewardship approaches to suit individual strategies.

◻ Participation in industry initiatives to boost ESG best practice (noting that active participation requires involvement, not just membership).

◻ Voluntary gender pay gap reporting.

◻ Consideration of diversity within the investment process.

We need to see more of it:

◻ Greater integration of ESG factors into remuneration.

◻ Systematic tracking and reporting of specific investment decision-making influenced by ESG factors, and of stewardship activities and outcomes. The ICSWG has a useful Engagement Reporting Guide.

◻ Measuring and monitoring of emissions data by managers, including scope 3.

◻ Taking firmwide net-zero commitments to the strategy level – only then will the overall commitment be achieved.

◻ Equity managers fully exercising their voting rights.

◻ Clear processes for prioritising engagement activities, and greater use of collaboration and escalation in the event of inaction.

◻ Engagement seeking to reduce emissions, not just improve disclosure.

◻ Robust conflicts of interest policies and mechanisms to provide evidence that they’re actually being implemented.

◻ Awareness of the current quality of delivery across ESG and the opportunities for improvement within integration and stewardship approaches.

◻ Proactive engagement with emerging ESG themes, such as biodiversity and human rights.

◻ Greater measurement of ethnicity and socioeconomic data.

◻ Alignment between investment team makeup and broader demographics.