Russell Investments’ sixth-annual ESG survey: ‘Governance’ remains the dominant consideration for asset managers as they increasingly amplify ‘environment’ and ‘social‘ factors
- Nearly 80% of 400 firms surveyed incorporate ESG factor assessments in their investment process
- Canadian managers show the most growth among surveyed markets from previous year
Toronto, October 23, 2020 — Increasing numbers of investment firms are incorporating additional environmental, social and governance (ESG) metrics into their investment processes, while also expanding the amount of resources dedicated to responsible investment, according to a new survey of asset managers.
Russell Investments’ sixth-annual ESG Manager Survey reveals the practices and views of 400 asset managers globally across a broad range of asset classes (including equity, fixed income, real assets and private markets) to assess attitudes toward responsible investing and how firms are integrating ESG factors into their investment processes.
The survey, conducted by the firm’s manager-research team, finds that asset managers are increasing the extent to which they incorporate ESG-specific considerations into their investment activities. 78% of managers1 surveyed globally now explicitly incorporate qualitative or quantitative ESG factor assessments into their investment processes (an increase of five percentage points compared to last year’s survey).
Indeed, almost all regions surveyed showed progress in the extent to which ESG considerations are regularly embedded into investment processes. Canada (+15%), the U.S. (+11%) and the UK (+11%) show the most growth since last year’s survey.
“As the fund management industry continues to embrace ESG integration, even amid pandemic-related challenges and volatility, our survey shows they are seeking better ESG information, deeper resources, broader consideration within investment processes and clearer regulatory standards,” said Yoshie Phillips, Director of Investment Research – Global Fixed Income. “At the same time, asset managers indicate they’re seeking greater clarity of the value-add from explicit ESG integration.”
Governance remains the critical consideration for asset managers, with 82% of respondents identifying this as the ESG factor with the most impact on their investment decisions, reflecting the importance of company management in delivering long-term enterprise value. However, environmental and social issues are becoming more pronounced in asset managers’ thinking, with this year’s survey showing a 4% increase in the number of managers identifying environmental considerations as the factor that most impacts their investment decisions.
Overall, engagement was cited as the most frequent source of ESG-related information. Notably, proactive engagement has become a particularly key feature among fixed income managers, with 92% now stating that they regularly engage with the underlying companies they invest in. An increasing number of fixed income managers, for example, report using bondholder engagement as a way to gain greater insights into the underlying companies or entities, improve transparency and influence business practices.
The Russell Investments’ survey also identifies that an increasing number of asset managers are using external ESG data providers to supplement their in-house views, reflecting growing recognition among the asset management community of the importance of ESG integration when analyzing investment opportunities.
“Our comprehensive ESG survey shows the investment industry is increasing its support for sustainability-related initiatives and improvements around reporting practices,” said Andrew Kitchen, Managing Director, Institutional Canada. “Russell Investments has incorporated and valued ESG as an essential consideration in our investment decision-making processes for many years, and we conduct this illuminating survey to bring greater insight and transparency to both clients and the industry as part of our robust commitment to ESG investing.”
The Russell Investments 2020 ESG Manager Survey findings can be obtained here.
About Russell Investments Canada Limited
Russell Investments Canada Limited is a wholly owned subsidiary of Russell Investments Group, Ltd. Established in 1985, Russell Investments Canada Limited has its head office in Toronto.
About Russell Investments
Russell Investments is a leading global investment firm providing tailored solutions and services to institutions and individuals through financial intermediaries. Russell Investments is dedicated to improving people’s financial security, leveraging an 84-year client-centric heritage rooted in investment innovation. Since 1985, for example, with the launch of our first tax-exempt bond fund, the firm has been helping investors grow after-tax wealth. Russell Investments is the fourth-largest adviser in the world with CA$397.3 billion in assets under management (as of 6/30/2020) and CA$3.4 trillion in assets under advisement (as of 6/30/2020) for clients in 32 countries. Headquartered in Seattle, Washington, Russell Investments operates through 19 additional offices in major financial centers such as New York, London, Tokyo and Shanghai.
1 The terms “manager”, "asset manager" or “money manager” refer to third-party sub-advisers.
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