While ESG integration seems high on the agenda of many asset owners, implementation remains a challenge when selecting and monitoring external managers. Cécile Churet, Sustainability Investing Client Specialist at RobecoSAM, researched the industry trends and concluded that there is still a long way to go.
When asked which sustainability investing approach asset owners want their external asset managers to apply, 70% indicated ‘ESG integration’, compared with 50% for screening and 25% for thematic approaches. However, this preference implies two challenges, i.e. identifying asset managers that truly integrate ESG into their investment decisions, and ensuring these aspects are incorporated in mainstream asset manager searches - and are actually implemented as intended. Churet found that while a fair amount is being done at the manager selection stage, less is done in terms of monitoring and ongoing dialogue with asset managers once they are selected.
A major challenge appears to be the appointment stage, as few SI-related aspects investigated at the selection stage are translated into formal contractual agreements. Only 6% of asset owners include reporting on portfolios’ SI characteristics in the contract clauses with their asset managers. Feedback from asset owners has been that part of the challenge of formalizing these requirements into legally binding agreements comes from legal advisers who are not convinced about ESG integration.
Similarly, less than 40% use a sustainable investment criterion as a formal component of manager performance evaluation. Two-thirds of asset owners assess managers’ ESG incorporation strategies, but less than half actually assess the quality and coverage of the ESG research used by the asset managers, or meet with their investment staff to review their SI competences.
As asset managers become more sophisticated and consider ESG issues as part of their fundamental analysis, using different sources of data and feeding them into their valuation models and investment decisions, it will become more difficult to isolate the ESG component of the investment process.
In conclusion, while ESG integration seems high on the agenda of PRI signatories, implementation remains a challenge. What’s more, these findings represent the practices of the most committed and most advanced asset owners. For much of the pension fund industry, there is still a long way to go on sustainable investment. Similar findings were observed across the whole PRI signatories’ base.
The content displayed on this website is exclusively directed at qualified investors, as defined in the swiss collective investment schemes act of 23 june 2006 ("cisa") and its implementing ordinance, or at “independent asset managers” which meet additional requirements as set out below. Qualified investors are in particular regulated financial intermediaries such as banks, securities dealers, fund management companies and asset managers of collective investment schemes and central banks, regulated insurance companies, public entities and retirement benefits institutions with professional treasury or companies with professional treasury.
The contents, however, are not intended for non-qualified investors. By clicking "I agree" below, you confirm and acknowledge that you act in your capacity as qualified investor pursuant to CISA or as an “independent asset manager” who meets the additional requirements set out hereafter. In the event that you are an "independent asset manager" who meets all the requirements set out in Art. 3 para. 2 let. c) CISA in conjunction with Art. 3 CISO, by clicking "I Agree" below you confirm that you will use the content of this website only for those of your clients which are qualified investors pursuant to CISA.
Representative in Switzerland of the foreign funds registered with the Swiss Financial Market Supervisory Authority ("FINMA") for distribution in or from Switzerland to non-qualified investors is ACOLIN Fund Services AG, Affolternstrasse 56, 8050 Zürich, and the paying agent is UBS Switzerland AG, Bahnhofstrasse 45, 8001 Zürich. Please consult www.finma.ch for a list of FINMA registered funds.
Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco/RobecoSAM AG product should only be made after reading the related legal documents such as management regulations, articles of association, prospectuses, key investor information documents and annual and semi-annual reports, which can be all be obtained free of charge at this website, at the registered seat of the representative in Switzerland, as well as at the Robeco/RobecoSAM AG offices in each country where Robeco has a presence. In respect of the funds distributed in Switzerland, the place of performance and jurisdiction is the registered office of the representative in Switzerland.
This website is not directed to any person in any jurisdiction where, by reason of that person's nationality, residence or otherwise, the publication or availability of this website is prohibited. Persons in respect of whom such prohibitions apply must not access this website.