Asia’s leading equities fund managers are to see their RI practices – from climate scenario analysis to remuneration – evaluated and presented to over 40 of Europe’s largest asset owners.
It’s part of a new project from not-for-profit conservation organisation WWF.
The asset manager assessments will be published later this year in an online tool allowing peer-to-peer comparison on various ESG criteria, including whether they set clear expectations for the sustainability practices and disclosure of their portfolio companies, and have science-based ESG integration capabilities.
WWF’s European teams will also share the individualised reports with 42 of Europe’s largest asset owners.
The NGO said the tool will be of use to asset owners in meeting the higher standards of ESG integration expected by emerging regulations and changing beneficiary expectations, and to asset managers in staying competitive within this context.
The asset managers to be included are yet to be named, but will be selected based on assets under management (AUM) and influence.
The evaluations will be based on self-disclosure from asset managers in line with WWF’s newly-launched RI evaluation framework.
According to WWF, the newly published framework combines several current best practice methodologies and expert groups, drawing for example from the Taskforce on Climate-related Financial Disclosures (TCFD), the EU Technical Expert Group, and the European Commission’s High-Level Expert Group on Sustainable Finance.
It also factors in WWF’s knowledge of scientific conservation, as well as of companies that are proactively transforming business models.
Speaking on the sidelines of RI Asia Japan 2019, Jeanne Stampe, WWF’s Head, Asia Sustainable Finance, said the NGO is focusing on Asian fund managers initially “because Asian companies generally further behind, but a lot of environmental and social issues are happening on the ground in Asia”.She added: “Asia’s where the growth is and a lot of money is going to be managed out here, because people are chasing yield. So it’s very important Asia doesn’t become a second tier market, not only for corporates having lower standards of sustainable practices but also for financial institutions.”
The framework, laid out in “Resilient and Sustainable Portfolios: A Framework for Responsible Investment” sets out six pillars: Purpose, Policies, Processes, People, Products, and Portfolio.
Among the criteria evaluated are whether the asset manager: links portfolio manager remuneration to ESG; has a strategy for decarbonising its portfolio; discloses its voting activities; discloses the impacts of its investments; offers ESG products; and discloses its portfolio carbon footprint.
The platform will take a similar form to WWF’s Sustainable Banking Assessment (SUSBA), an interactive tool for assessing and benchmarking banks on their corporate governance and ESG integration performance.
The tool allows users to pull up a bank’s performance on specific criteria, for example on water and climate issues.
WWF says SUSBA is already being used by investors to engage with portfolio companies, as well as by regulators and banks themselves to compare progress with regional peers.
WWF has presented the tool at 22 workshops to 964 bankers, 27 Institutional Investors including five asset owners, and 12 banking associations and regulators.
WWF plans to include training on its new RI framework during workshops and training in the coming year. Over the last 18 months it has trained over 510 individuals through six workshops and 11 bilateral training sessions.
Stampe said: “This is to monitor how well people are implementing what [initiatives like] TCFD and PRI are asking them to do – to assess if people are implementing this in the true substance and spirit.”