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“Deafening silence” on ESG from asset owners – Extel

‘State of the Nation’ confidential survey of leading sustainability professionals.

A significant, confidential survey of senior RI practitioners by Thomson Reuters Extel has highlighted a “deafening silence” from asset owners on SRI and ESG issues. The report, which contains direct, non-attributable interviews with 20 leading sustainability professionals was released to mark the tenth year the news and data giant and UKSIF, the UK sustainable finance group, have worked together. The report said the practitioners felt there was less discussion and focus from asset owners on SRI/ESG than there should be. It said this was partly due to a lack of knowledge and partly because it is perceived that the UN-backed Principles for Responsible Investment (UN PRI) had “fixed the problem”. Notably it said that asset managers were looking for asset owners to get more involved before doing so themselves, with the role of asset owners coming up “very frequently” from both the buy- and sell-side of the industry (asset managers and brokers). It quotes a survey respondent as saying: “There is a deafening silence from ultimate asset holders. They need to find their voice.”Steve Kelly, Managing Director of Extel, Thomson Reuters, presented the survey at this week’s annual summer event of UKSIF, the UK Sustainable Investment and Finance Association. One reason for asset owner inertia, the report said, was a contradiction between SRI/ESG being seen as alpha generation, or as a way to reduce risk or “save the world”. The 55-page report, officially part of the Thomson Reuters Extel/UKSIF SRI & Sustainability Survey 2012, also looked at the outlook for the UN-backed Principles for Responsible Investment. It quotes respondents as saying the PRI is still largely unknown within asset management firms. It said engagement, where asset managers/owners are in dialogue with companies, needed to be “professionalized” and be about material issues – rather than just a “polite exercise”. As for investment consultants, the survey concludes: “With very few exceptions, most asset managers feel consultants are only paying lip service, at best, on SRI/ESG factors, and are content with a tick in the UNPRI box.”