Asset managers have increasingly hired dedicated ESG personnel or sustainability teams over the past year, as ESG factors continue to underpin investment decision-making.
The firm’s annual ESG Manager Survey, which canvassed 169 asset managers representing $20 trillion in assets under management, discovered that 75 per cent of participants hired ESG-related staff in the past year.
Some 23 per cent introduced ESG teams, 10 per cent hired ESG data integration and analytics roles, 9 per cent added stewardship positions, and 7 per cent hired equity investment roles.
“As the industry continues to focus on responsible investing practices, active managers from all major asset classes are increasingly incorporating ESG considerations into their investment processes and hiring for ESG-related roles,” said Kris Tomasovic Nelson, senior director and head of ESG investment management at Russell Investments.
“Climate risk is at the forefront of investors’ concerns, and we expect ESG to become further rooted in the investment landscape.”
The survey also revealed that the number of asset managers whose investment decisions are not driven by ESG factors has declined to just 7 per cent, contrasting 22 per cent the year prior.
Nelson added: “We believe this reflects a deepening recognition that ESG issues – encompassing areas such as climate risk and labour relations – are financially material.”
Russell Investments studied specific ESG considerations that influence investment choices. Over one-quarter cited materiality to reduce security risk, 19 per cent said the ability to drive positive returns, another 19 per cent said governance concerns, 15 per cent cited climate risk, and another 15 per cent said social risk.
“Fewer managers are reporting that ESG considerations do not affect their investment decisions. Our annual survey shows an upswing in commitments to responsible investing reporting frameworks and initiatives, and our research suggests that ESG has firmly established itself as a lasting force in the investment landscape,” the senior director continued.
Nelson also emphasised that ESG integration challenges are continuing to persist. These include the availability of data, lack of standardised reporting for corporations and meeting diverse client needs.
However, data from Capital Group earlier this month described that these adoption barriers have become “less pronounced” today than two years ago.
The quality of ESG data remains the most significant concern, with 54 per cent of global investors stating that consistency and reliability of data is still a very challenging issue for their ESG adoption. This is down from 62 per cent two years ago.
“We know the road for global ESG integration is not without its challenges, but our survey shows that markets are moving towards integration,” commented Jihan Diolosa, head of global ESG strategy at Russell Investments.
“From here, it is up to asset managers to translate their commitments into reality and ensure their engagement has the desired impact on industry practices,” she added.
