Six of the world’s largest asset managers – BlackRock, Vanguard, State Street, Fidelity Investments, Capital Group, and JP Morgan Asset Management – with almost $20 trillion in assets under management, all from the US, are among the poorest performers on ESG integration into their investment strategies, according to a major study of the 75 biggest funds houses by AODP (Asset Owner Disclosure Project), part of ShareAction, the London-based responsible investment lobby group.
The top five performing asset managers – all European, and the only ones scoring A grades – are Robeco, BNP Paribas Asset Management, Legal & General Investment Management, APG Asset Management and Aviva Investors. ShareAction said they were ‘Leaders’ with strong management of risks and opportunities as well as impacts across multiple responsible investment themes.
Notably, the study also found that being a member of the United Nations-supported Principles for Responsible Investment was not necessarily indicative of strong performance by a fund manager on responsible investment. It said 50 per cent of the assessed managers in its D and E bands are PRI signatories, and that many managers “appear to use the initiative as a tick box exercise.”
The study, comes just days after CEO’s of three of the world’s largest asset owners – CalSTRS in the US, Japan’s GPIF and USS in the UK – wrote an open letter saying that they would be less likely to hire asset managers that did not focus on ESG factors and long-term value creation.
One of the world's biggest investment consultants said the study's findings would help inform manager selection decisions. Luba Nikulina, Global head of Research at Willis Towers Watson, says: "We welcome this research, which will serve as a valuable tool for asset owners looking to ask tough questions of asset managers. It is hard to see how managers failing to take suitable action will be able to meet the needs of their present and future clients as they seek more ESG-aware stewards of their assets."
The six poorly performing US mega-managers ranked in the bottom two bands (D and E) of the AODP study.
ShareAction says that means they are either doing ‘business as usual (D), or are ESG ‘Laggards’ (E).
BlackRock, State Street, Fidelity Investments and Capital Group all scored D marks. ShareAction said there was “Little evidence to suggest adequate management of material responsible investment risks and opportunities” at the firms.
Vanguard and JP Morgan Asset Management were in the bottom E band, which according to the study means “poor management of material responsible investment risks and opportunities”
The 75 asset managers assessed manage more money than the GDP of the US, China and the European Union combined, ShareAction said.
The AODP survey is based on data on the integration of major ESG themes including responsible investment governance, climate change, biodiversity and human and labour rights at the fund managers. AODP collects the data through an extensive survey using publicly available information and information requests to fund managers based on the reporting criteria of the G20-backed Taskforce on Climate Related Financial Disclosure (TCFD).
The questionnaire was developed with input from external experts and mapped to the structure of the TCFD recommendations for all themes.
It ranks the asset managers based on disclosure and management of the ESG risks and their impacts across investment portfolios.
All 75 asset managers responded to the survey, with the exception of PGGM, SEB, Bradesco Asset Management, JP Morgan Asset Management, Fidelity Investments, and E Fund Management. For these managers, ShareAction populated the survey responses based on publicly available information and gave the managers the opportunity to review this.
The webinar will examine:
– The results of the first report: which asset managers rank highly and why…and vice versa.
– The report methodology and interesting findings on risk management and portfolio impact.
– Why asset managers should up their game on responsible investment, and how they can do so.