Asset Managers Falling Short on ESG: Report

Some of the world’s largest asset management companies are falling short on responsible investment standards, according to a new report.

A study of 77 asset managers running more than $77 trillion conducted by ShareAction, a UK-based nonprofit organization, found that just four were ranked A or AA, the top score, having been assessed across five areas of environmental, social, and governance criteria.

The report, titled ‘A Point of No Returns’, said two thirds of the companies demonstrated “serious gaps in their responsible investment policies and practices” in at least one area of the five — governance, stewardship, climate, biodiversity, and social.

“The impact of the decisions these asset managers make cannot be understated,” said Claudia Gray, head of financial sector research at ShareAction. “As managers of tens of trillions of dollars, and investors in the biggest companies from many industries, their decisions have a vast impact all over the world. They should be considering their effects on our climate, the ecosystems providing our life-support systems, and human wellbeing worldwide.”

“These problems create real risks for the big companies and their investors, but as our research has uncovered, there remains a lack of ambition to drive real-world improvements.”

New York Life Investments, JP Morgan Asset Management, and T Rowe Price were the highest rated US-based group in the study, all receiving a ‘B’ score. The highest overall was Netherlands-based Robeco, which received a ‘AA’ rating, while France’s BNP Paribas Asset Management and UK-headquartered Aviva Investors and Legal & General Investment Management all received ‘A’ ratings.

ShareAction ranked 11 companies as ‘E’, the lowest score. These included Vanguard, Fidelity Investments, and Mellon Investments. BlackRock, the world’s largest asset manager, and State Street Global Advisors were among the 16 companies that received a ‘D’ rating. ShareAction said this meant that “those managers with the greatest influence are coming worst in class”.

Some companies demonstrated significant improvement from ShareAction’s previous study, published in 2020, including JP Morgan Asset Management, which the nonprofit said was in part due to the company’s “adoption of frameworks for climate-related investments”.