Just 8 per cent of almost 100 global asset managers reviewed by Morningstar can be recognised as leaders in the ESG space, including a specialist Australian firm.
The fifth edition of the research house’s ESG Commitment Level report surveyed 97 firms globally, including 18 in Australia, and found eight were classed as ESG Leaders.
These firms are those that have focused their business models on sustainable investing and combine sustainability goals with financial returns.
The eight firms are:
- Australian Ethical
- Impax
- Stewart Investors
- Robeco
- Parnassus
- Boston Trust Walden
- Domini Asset Management
- Affirmative Investment Management
“These firms have not rested on their laurels. Rather, they have been at the cutting edge of developing innovative frameworks to assess ESG risks as well as the impacts, both positive and negative, that companies and investments have on the environment and society at large.
“Strong internal controls of sustainability drive continued innovation in the space, and these firms stay ahead of the curve by promoting improved disclosure and practices in portfolio companies as well as collaborating with regulators and peers to raise sustainability standards.”
Australian Ethical was set up in 1986 and includes managed funds, superannuation, exchange traded funds (ETFs) and pension products.
In its most recent results, the firm said it is approaching $10 billion in assets under management after seeing net flows of $145 million in the three months to 31 December. FUM was $9.6 billion, up by 5 per cent from $9.2 billion in the previous quarter. This was divided between $2 billion in managed funds and $7.6 billion in superannuation.
Looking at the other Australian asset managers, Alphinity, Altius and Melior received an advanced rating. Ausbil, Betashares, Dexus, DNR Capital, First Sentier, Macquarie and Pendal received a basic rating, and Allan Gray, Antipodes, Bennelong, GQG Partners, Hyperion, Platinum and Solaris all scored low.
The firms that received a low rating were classed as those which have been slower to adopt ESG policies and processes or only have a small percentage of assets in funds focused on sustainability.
The Morningstar report surveyed firms on their history of sustainable investing, alignment of firm’s investment philosophy and ESG principles, and level of consistency of ESG integration across their investment line-up.
