Australia’s largest manager blasé on responsible investment
Macquarie Asset Management has been given a low rating of ‘D’ for its approach to responsible investment compared to its global large asset management counterparts.
The ranking by ShareAction, a non-profit organisation that promotes responsible investment, looked at the world’s 75 largest asset managers across four metrics – responsible investment governance, climate change, human rights, and biodiversity.
Macquarie was the only Australian representative and was ranked 55th. The report noted that all managers within Asia Pacific generally performed poorly, with Japan leading the pack.
The ‘D’ rating was described as “business as usual” with “little evidence to suggest adequate management of material responsible investment risks and opportunities”.
All assessed managers were members of the United Nation’s Principles of Responsible Investment (UNPRI).
“The scale and urgency of current ecological and social crises demands far more than a ‘business-as-usual’ approach from asset managers, who are encouraged to use this ranking and report findings to benchmark their individual performance and drive improvements where needed.”
“…While many PRI members show signs of leadership in responsible investment, many of the assessed managers also appear to use the initiative as a tick box exercise. Clients ought not to take membership of the PRI as a proxy for a good responsible investment approach and should ask managers questions about their policies and practices.”
Robeco topped the rankings, followed by BNP Paribas Asset Management, Legal and General Investment Management, APG Asset Management, and Aviva Investors. The top five managers all received an ‘A’ rating.
Legal and General was the only passive manager to crack the top five which the report said demonstrated that passive investors could have a leading approach to responsible investment.
The ‘A’ rating was not the highest rating but was described the managers as “leaders” that had “strong management of risks and opportunities as well as impacts across multiple responsible investment themes”.
No manager received a ‘AAA’ rating that was described as a “gold standard” where “leading practice performance in managing risks and opportunities as well as impacts across all assessed responsible investment themes”. An ‘AA’ rating was also not given to any manager.
The bottom ranked managers were E Fund Management, MetLife Investment Management, Fidelity Investments, Credit Suisse Asset Management, and J.P. Morgan Asset Management. All managers received an ‘E’ rating.
‘E’ ranked managers were described as “laggards” as “evidence suggests poor management of material responsible investment risks and opportunities”.
The six largest managers by assets under management (AUM), with a combined US$20 trillion ($30.98 trillion) all received either a ‘D’ or ‘E’ rating.
These managers were BlackRock, Vanguard, State Street Global Advisors, Fidelity Investments, Capital Group, and J.P. Morgan Asset Management.
“…despite their size, they all performed poorly on the factors we see as fundamental to robust responsible investment practices,” the report said.
Fixed income focused managers had rankings between ‘BBB’ and ‘E’ but none in the AAA to A categories.
“While some asset managers demonstrate leadership in particular areas, none are performing strongly across each of the topics included in our methodology,” ShareAction said.
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