Fund Forum: Two thirds back ESG integration at plenary at funds industry conference

Two thirds (67%) of voting attendees at one of the main plenary sessions at the Fund Forum conference in Monaco – among the world’s largest gathering of asset managers with more than 1,200 delegates – said yesterday (June 26) that they believed that asset managers should integrate ESG criteria into their investment processes. The electronic poll was taken on a panel of heavyweight European asset management CEOs including Christian Dargnat, CEO of BNP Paribas Asset, Keith Skeoch, CEO of Standard Life Investments, Martin Gilbert, CEO of Aberdeen Asset Management, Allan Polack, Head of Asset Management at Nordea and Francis Jackson, Managing Director, EMEA Regional Executive Investor Services at JP Morgan.
The panel was titled: “Reality in the boardroom: governance, sustainability and long-term investing.” Skeoch of Standard Life said that he thought the vote was indicative of the self-evident value of including ESG in long-term investment strategies: “Why wouldn’t you: there is clear evidence that it dampens volatility of investments over time. It’s important also that governments and regulators see that this is part of the investment process also.” Polack at Nordea agreed butnoted that true integration of ESG factors into asset management was not easy and required real dedication to be meaningful: “We see the risk element and we also see clear client demand, but we also believe that some of this is also the corporate social responsibility of the asset management industry and that we have to show oversight of the companies and sectors we are investing in, particularly when you think about issues like the Rana Plaza disaster in Bangladesh.”
BNP Paribas’ Dargnat added: “To be a long-term investor without integrating ESG criteria would be contradictory, but it can be difficult to clearly demonstrate materiality. However, we believe ESG can improve the risk profile of assets and we believe there are companies where we should be asking ourselves whether we should be investing in them or not.” Gilbert at Aberdeen said there was a clear question to be asked on the governance side about the protection of minority shareholders, particularly in countries with unclear shareholder rights. Gilbert said there also needed to be a return to clarity and simplicity in asset management via buy and hold strategies with lower stock turnover: “Let’s be clear, it’s turnover that is a huge cost to the customer,” he said.