Environmental, social and governance considerations have gained traction in recent years with nearly 75 per cent of global asset managers saying they have an ESG policy and an equal percentage incorporating ESG considerations across their investment platforms, according to a new survey by investment consulting firm Callan.
The inaugural study, which polled more than 1,200 global asset managers spanning a broad array of public and private asset classes, found equity was the primary asset class, at 50 per cent of the respondents, and fixed income, real estate and private markets also with meaningful representation.
Nearly 70 per cent of all respondents said they subscribe to third-party ESG research, with this finding most common for public equity and fixed income managers. As well, engagement on ESG matters is most common (just over 70 per cent) for private equity managers, followed by equity (55 per cent), fixed income (54 per cent) and real estate (58 per cent).
The survey also found nearly 90 per cent of all large asset managers (with more than US$10 billion assets under management) said they publish a report that highlights their firm’s efforts around engagement, ESG research and internal achievements, while just around 20 per cent of smaller firms (less than $10 billion AUM) do so. The same percentages (around 90 per cent and 20 per cent, respectively) of large and small firms have employees dedicated to ESG.
However, fewer than 50 per cent of small firms said they have an accessible, centralized ESG research portal, while more than 70 per cent of large firms said they have this resource. More than 75 per cent of large firms said they have proxy voting policies that address ESG, while fewer than 50 per cent of smaller firms said the same.
Breaking down the results by geography, the survey found asset managers outside of the U.S. are further along on incorporating ESG considerations than those in the U.S. For example, about a third of U.S. asset managers said they publish a sustainability report compared to more than half of non-U.S. respondents.
As well, carbon footprinting is a more common capability outside of the U.S., with just about 40 per cent of U.S. firms saying they have this ability compared to well over half of non-U.S. firms. Slightly more than 50 per cent of U.S. equity managers said they have proxy policies that address ESG compared to more than 80 per cent for those outside of the U.S. And engagement on ESG matters was incorporated into the investment process at more than 75 per cent of non-U.S. firms compared to just 50 per cent for those in the U.S.