CAMRADATA has published a new whitepaper entitled ‘Not all approaches are created equal’ which explores the latest global trends in responsible investment and shares insight from investment managers who attended the firm’s annual Responsible Investment roundtable.
The roundtable participants included Lombard Odier Investment Managers, M&G Investments, Newton Investment Managers, KPMG, Esmée Fairbairn Foundation, Cambridge Associates, Redington and Willis Towers Watson.
Sean Thompson (pictured), Managing Director, CAMRADATA, says: “Responsible Investment (RI) factors are now moving from being a ‘nice to have’ to an integral part of the investment process. Asset managers have woken up to what investors are demanding. However, the implementation of RI strategies globally has been far from homogeneous. Why is this the case?”
“Our whitepaper explores this issue and looks at why Europe is leading the way in Responsible Investment, with institutional investors looking beyond financial returns to make impact investments in order to contribute towards a sustainable future. It also asks if ESG factors will lead to higher profitability, covers the different strategies being deployed by investment managers and any barriers that exist for investors.”
According to the paper, sustainability is an issue for all companies, even traditional sector leaders and those in emerging markets but its adoption is uneven, which leaves asset managers to evaluate how genuine the company’s approach to responsible investing is.
Stewardship is a vital element to stockholding and consultants are looking for asset managers to demonstrate how they steward companies.
In addition, the degree of influence exerted by a shareholder or bondholder bears no correlation to the size of their holding. Belief in a cause will effect change, even though on profound issues, this may take time.
Some consultants are also sceptical of index-tracking strategies in terms of responsible investing. The concern is to what degree passive managers steward effectively when holding a rigid quote of share.
Thompson adds: “Our roundtable guests agreed that Environmental, Societal and Governance (ESG) issues in investment management were rapidly becoming mainstream. They highlighted the number of resolutions on climate change at AGMs has doubled in three years and that the publication of Thomas Piketty’s Capital and the MeToo movement, has led to asset managers increasingly incorporating social and gender equality into their strategies.
“Another key driver is that regulation pertaining to ESG is rising. UK pension funds will have to make policy statements from October on considering climate change in their investments. Car manufacturers in the EU must who they are reducing noxious emissions from their vehicles. These are just some policies that affect companies and the investors who finance their activity, but they all matter as ESG issues. Evaluating the impact of such issues and the opportunities for responsible investment will increasingly be the focus of investors and their advisers.”
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