ESG and climate change need to be explicit in RFPs say managers

Asset managers say their institutional investor clients need to give them clear guidance on ESG and climate change issues if responsible investment is to move forward. Vicki Bakhshi, associate director of governance and sustainable investment at F&C Asset Management, said a small number of investors so far are including them on requests for proposals (RFPs). Speaking at an event organised by EIRIS, the ESG research firm, she said: “If there was a standard ESG question that would change the issue. Asking the question will start to force change. And pension funds will have to start to disclose what they’re doing on this.” Mandates are a factor, said Rory Sullivan, head of responsible investment at Insight Investment. He said: “One issue is clearly the structure of investment mandates. A big step forward would be to put engagement into mandates. We’re like performing dogs. When they [pension funds] say jump, we say how high?” But, he said, he didn’t yet see “compelling market demand” for responsible investor funds.Bruce Duguid, head of investor engagement at the Carbon Trust, the UK low carbon economy initiative said investors still do not ‘get’ the impact of climate change on their portfolios. The Trust is mulling whether to develop climate change scenarios that institutions can hand over to their asset managers. EIRIS research director Stephanie Maier invoked institutions’ fiduciary duty to engage with companies and regulators to mitigate the effect of climate change.
Peter Michaelis, head of SRI at Aviva Investors, said his firm puts a clause in every agreement with every investor. “We will supply them with information on our engagement activities. They’ll get that information whether they want to or no (unless they opt out).” Craig MacKenzie, senior lecturer in Sustainable Enterprise at the University of Edinburgh, said he’s starting to see asset managers coming to him asking for advice in how to deal with pressure from pension funds on ESG matters.