IIMI, the boutique asset management think tank, reveals, in a member survey published today, that almost double the number of member firms are incorporating environmental, social and governance factors (ESG) into their portfolios, compared with five years ago. The results of the survey are included in IIMI’s paper: The Evolution of ESG in Asset Management, published today.
SUMMARY OF IIMI’s ESG SURVEY RESULTS
- Five years ago, 47.6% incorporated ESG in their portfolios – today the figure is 90.5%
- 85.8% plan to further incorporate ESG factors
- 90.4% are or intend to sign up to the UN Principles for Responsible Investment
- Biggest driver behind adoption of ESG in portfolio decisions is risk management
- Just over half of respondents concerned about the EU’s ESG regulatory proposals
- All respondents agree that ESG should be industry-led rather than driven by regulators
“Our survey suggests ESG considerations are already firmly embedded in decision-making process and that a dramatic shift has happened in the past five years.
It is obvious however that the sheer variety of approaches to and interpretation of ESG has led to increasing debate in the industry and confusion amongst potential customers. With the European Commission’s announcement that it will step in with regulation, we felt it was important to sound out the view of IIMI’s members – specialist, independent, owner-managed boutiques.
The results of the survey and analysis of recent developments, including ESMA’s announcements in relation to ESG in December 2018, have informed a number of recommendations.
Firstly, The EU’s reporting requirements need to ensure they do not contradict or duplicate existing obligations such as those outlined in the TCFD. This will do nothing but confuse clients. A better solution could be for the industry to self-regulate and adopt one of the most comprehensive standards like TCFD on a universal basis.
Once the relevant Directives are in place, IIMI encourages ESMA to publish a regular summary of what it considers to be best practice under the principles-based approach, to encourage greater harmonisation and higher standards across the industry.
ESMA confirmed it will not adopt a prescriptive approach to ESG regulation which is a welcome announcement. However, the IIMI membership is unanimously opposed to ESG becoming an issue driven by regulators, instead preferring industry-led initiatives to support the development of sector standards.”Jamie Carter, Chairman of IIMI