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In March 2020, 3 mission-led foundations - @FProvFoundation @blagravetrust & Joffe Trust - held a public tender for a new asset manager. Today marks the launch of their findings into the state of charity asset managers & their approach to ESG & responsible investment #ESGOlympics
The report outlines emerging best practice as well as where asset managers are lagging behind. Most asset managers claimed in-house expertise but didn't have teams to back this up. Weakest proposals came from asset managers reliant on third party funds #ESGOlympics
Many asset managers just weren't able to properly scrutinise the ESG credentials of 'ESG' funds because they didn't have in-house knowledge.
A key finding was that social issues - the 'S' of ESG - remains the poor relation compared to E & G #ESGOlympics
A key finding was that social issues - the 'S' of ESG - remains the poor relation compared to E & G #ESGOlympics
Common holdings in ESG funds include technology, media, utilities, manufacturing and retail - all sectors with high 'social' risk factors. Common "excuse" from asset managers was that the data is harder to find and analyse... #ESGOlympics
Voting, engagement & escalation- the asset manager industry is really lacking here and responses and reporting on voting is incredibly wide. There is a distinct lack of detailed policy for engagement with investee companies and very few detailed escalation strategies #ESGOlympics
When it comes to impact reporting - many asset managers acknowledged that there was still work to do & current practice is often inadequate. Many cite a lack of data as a barrier... #ESGOlympics
Recommendations for asset owners. These are minimum standards that you should expect:
1. a presumption to vote in favour of ESG resolutions, taking a 'comply or explain' approach with disclosure of rationale.
This should be the starting point for an ESG policy
#ESGOlympics
1. a presumption to vote in favour of ESG resolutions, taking a 'comply or explain' approach with disclosure of rationale.
This should be the starting point for an ESG policy
#ESGOlympics
2. Active ESG engagement that goes further than disclosure of distance targets
3. Engagement escalation policy - asset managers should produce a clear policy. Claim to ESG engagement are unconvincing without such a policy
#ESGOlympics
3. Engagement escalation policy - asset managers should produce a clear policy. Claim to ESG engagement are unconvincing without such a policy
#ESGOlympics
4. Better integration of 'social' analysis into stock selection & shareholder engagement.
One way that asset managers can do this is to support initiatives like @WDIwork
#ESGOlympics
One way that asset managers can do this is to support initiatives like @WDIwork
#ESGOlympics
5. Regular disclosure of all holdings, voting record and engagement activity.
This allows for transparency, and for asset owners to hold their asset managers to account against the marketing spiel.
#ESGOlympics
This allows for transparency, and for asset owners to hold their asset managers to account against the marketing spiel.
#ESGOlympics
These recommendations are considered bare minimum for asset managers. Analysis shows that few asset managers are meeting these recommendations, however, many of them stated a willingness to do so.
Bigger question - why aren't asset managers doing this regardless? #ESGOlympics
Bigger question - why aren't asset managers doing this regardless? #ESGOlympics
You can see the whole report here: http://www.friendsprovidentfoundation.org/wp-content/uploads/2021/02/ESG-investing-olympics_state-of-the-sector-report-2020_final.pdf
Time for asset managers to step up; hopefully the 250 asset managers who look after the top 5000 UK charities will lead the way. #NoMoreExcuses #ESGOlympics
Time for asset managers to step up; hopefully the 250 asset managers who look after the top 5000 UK charities will lead the way. #NoMoreExcuses #ESGOlympics
If you're reading this thread & wondering about collaboration and education spaces for charity investors, I would (with a bit of bias) recommend you check out the Charity Responsible Investment Network that @ShareAction coordinates https://shareaction.org/coalitions-and-networks/charities-responsible-investment-network/ #ESGOlympics
