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European pension funds increasingly including ESG in RFPs – survey

Aberdeen Asset Management polls 200 funds

Some 17% of requests for proposals by European pension funds in the first half of this year asked whether asset managers were signatories to the United Nations Principles for Responsible Investment, a survey by Aberdeen Asset Management has found.
The firm reckons this amounts to “40% of all equity RFPs and more than 80% of all RFPs containing any ESG [environmental, social and governance] criteria”. Aberdeen reckons funds are increasingly prepared to “shut out” managers who aren’t PRI signatories.
This would appear to be borne out by “mainstream” managers such as T. Rowe Price and Legal & General Investment Management signing up to the PRI recently.
In 2008 just over a quarter of equity RFPs asked specifically about ESG factors – that has now risen to 50% in the first half of 2010, Aberdeen added.
“In other words, European institutional investors are on the brink of making ESG a majority concern,” the UK-based house states in a new 22-pageEnvironmental, Social and Governance White Paper.
The firm – which has £164.7bn (€201bn) under management – surveyed 200 pension funds with a combined €292bn under management between June and September this year and looked at 400 RFPs issued in the last three years.
It found that 17% of European pension funds are PRI signatories, with Denmark the leader at 85% take-up; there are no signatories in Italy. Another 14% of pension funds are seriously considering becoming signatories. Almost two-thirds of funds surveyed have an ESG policy in place.
Olivier Cassin, head of research at consulting firm Bfinance, is quoted saying that despite the number of asset manager PRI signatories, there are probably less than 10 managers in Europe who truly integrate ESG. Mercer gives just 1.5% of equity strategies its highest ESG1 rating, for example.
Only 15% of respondents require their investment consultants to have signed up.
Link to Aberdeen’s White Paper site