5% more asset managers incorporating ESG factor assessments into investment processes

Written by Adam Cadle

07/10/2020

Almost 80% of global asset managers now explicitly incorporate qualitative or quantitative ESG factor assessments into their investment processes, an increase of 5% compared to last year.

Russell Investments’ sixth annual ESG manager survey analyses the practices and views of 400 asset managers globally across a broad range of asset classes (including equity, fixed income, real assets and private markets) to assess attitudes toward responsible investing and how firms are integrating ESG factors into their investment processes.

Almost all regions surveyed as part of the study showed progress in the extent to which ESG considerations are regularly embedded into investment processes. The US (+11%), Canada (+15%) and the UK (+11%) show the most growth since last year’s survey.

Governance remains the critical consideration for asset managers, with 82% of respondents identifying this as the ESG factor with the most impact on their investment decisions, reflecting the importance of company management in delivering long-term enterprise value. However, environmental and social issues are becoming more pronounced in asset managers’ thinking, with this year’s survey showing a 4% increase in the number of managers identifying environmental considerations as the factor that most impacts their investment decisions.

Jihan Diolosa, head of responsible investing EMEA, Russell Investments, added: “ESG is no longer an optional ‘add-on’; it is now an essential consideration that asset managers have to incorporate into their decision-making processes. Our research shows that the investment industry is moving in the right direction, with increased support for sustainability-related initiatives and improvements around reporting practices marking important steps in the journey. Clear challenges to progress remain, particularly in certain regions. However, the broad direction of travel is clear and the asset managers who do not adapt to the changing landscape will be left behind.”

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