Only 8 percent of pension funds regard their asset managers as “excellent” when it comes to achieving ESG goals on their behalf, a global survey by Amundi has found.
The poll of 158 pension funds, representing combined assets under management of €1.91 trillion, is a collaboration between Amundi’s investment institute and UK-based research provider Create-Research.
Twenty-two pension funds rated managers as “good” at achieving their ESG goals, with the remaining 70 percent seen as “fair or poor”.
“The gap reflects perceptions of widespread greenwashing that has invited intense regulatory scrutiny on both sides of the Atlantic,” the report stated.
Anonymous quotes were included in the report. One asset owner said: “In ESG investing, hope has run ahead of reality. Greenwashing is the outcome.”
Another told Amundi: “Stewardship and proxy voting are as important as asset allocation, if not more so.”
On stewardship, 65 percent of pension funds said they will require asset managers to have a good track record on stewardship and proxy voting over the next three years.
A review by a group of large UK asset owners, published in early November, found growing stewardship misalignment with managers.
Amundi’s survey also found that just 14 percent of pension funds are willing to accept a hit on returns to meet their ESG goals.
Of those willing to sacrifice some performance, many already had good funding status and seemed “content with acceptable absolute returns that may fall short of benchmarks from time to time”.
Close to two-thirds (63 percent) of respondents had “suffered ill-timed sector bets during the 2022 bear market, harming performance of ESG investments”.
Unsurprisingly, 60 percent of investors also said they believed ESG investing had become “riskier” following the adverse performance of 2022, while 48 percent said ESG investing “hurts performance in the short-term”.
Nevertheless, most respondents (79 percent) believe that ESG factors will not hurt performance in the long term.
Over the next three years, 53 percent of investors expect the share of ESG investing in their active portfolio to rise. For passive portfolios, the figure was 49 percent.
“ESG investing has evolved,” said Amin Rajan, Create-Research’s CEO. “We are now seeing a more robust version coming into view with a strong focus on real world outcomes and accountabilities as well as financial returns.”