(London) – The push towards sustainable investment strategies continues to rise among asset managers, according to the latest Environmental, Social and Governance (ESG) survey by Aviva Investors’ Multi-Manager Research team.
The survey, which canvassed opinion from a broad mix of international firms, found 93% of asset managers recognize growing appetite from their clients, while 80% have observed a rise in requests for bespoke ESG solutions. The research also showed that over 70% of respondents incorporate ESG factors into 75-100% of their funds’ investment processes, up from just over 50% in 2014.
Isabel Emo Capodilista, Head of Multi-Manager Research at Aviva Investors, said:
“ESG integration has become mainstream and, by itself, is no longer a differentiator. Our findings show investors want more tailored approaches as to how ESG can work best for them. Similarly, one-fifth of respondents undertake ESG stress tests to better understand risks that could impact investments and how to protect against them.”
In turn, the proportion of investment managers incorporating ESG considerations into fund manager and analyst remuneration has risen fourfold since 2014, to 42%.
Isabel Emo Capodilista said:
“Good progress has been made in rewarding managers based on ESG criteria; however, almost one-third of respondents could not say with conviction that all their managers and funds take these considerations into account. Likewise, although 70% of respondents believe ESG issues should be integrated into executive pay, just 26% stated their own company does this. This is indicative of a struggle within the asset management industry to find consistency in its approach.”
In terms of approaches taken to ESG integration, 90% of participants cited direct engagement with companies, while use of third party research (83%) and rating holdings on ESG (70%) were other common responses.
Isabel Emo Capodilista added:
“It is encouraging that over half of active managers who engage with companies believe it will improve performance, which suggests frameworks such as the Principles for Responsible Investment are driving positive change and establishing industry standards. That said, a contradiction still exists between belief and execution and there is room for greater uniformity across the industry.”
The survey identified several challenges around ESG integration, including availability and quality of data, low senior leadership buy-in, difficulty in measuring impact and understanding material ESG risks.
Isabel Emo Capodilista said:
“The industry faces challenges around consistency of language and definitions of ESG. Addressing these would reinforce confidence in the products and services investors receive. While greater company disclosures and a better understanding of quantifiable ESG factors has resulted in an uptick in the quality and accuracy of data from the investment industry, further improvements should facilitate the future growth and development of ESG strategies.”
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Notes to editors
Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £331 billion ($421 billion USD, $575 billion CAD) as of December 31, 2018.
About the survey
The Environmental, Social and Governance (ESG) survey is an informal, non-scientific survey of a variety of investment management firms based in various global locations. Survey results are provided for informational purposes only and are not intended as investment, tax, or legal advice for any specific individual or entity.
Aviva's asset management business, Aviva Investors, provides asset management services to both Aviva and external clients, and currently manages £331 billion in assets. Total group assets under management at Aviva group are £470 billion.
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