2021 ESG Manager Survey: The red flag is raised on climate risk

The importance of environmental, social and governance (ESG) integration is reaching universal recognition amongst the asset management community.

Across the globe, regulators and investors are demanding more rigour and transparency for ESG analysis. There is a general acceptance that the incorporation of ESG considerations provides asset managers with a more comprehensive, forward-looking picture of their investment opportunities.

The attempt to harmonise ESG frameworks within organisations is happening across the majority of asset classes. An increased number of firms are adding more ESG metrics into their investment process, expanding their dedicated responsible investment resources, and providing greater transparency through reporting.

A total of 369 asset managers from around the world participated in our 2021 ESG Manager Survey, representing $79.6 trillion assets under management. Our dedicated research shows that asset managers are increasing efforts to improve the overall quality of inputs when integrating ESG considerations. 55% of the respondents now have dedicated ESG professionals, compared to 43% in the previous year.

In this wave of change, asset managers reported that data providers are integral in providing a broader perspective of companies or entities in the marketplace, with engagement activities playing a vital role in how asset managers make use of ESG-related information. Furthermore, the results from our 2021 survey indicate that there is an amplified focus on climate risk and a strong commitment to reaching net zero greenhouse gas emissions by 2050. This commitment is likely to increase amongst asset managers following the 2021 United Nations Climate Change Conference (also referred to as COP 26), accelerating the action towards the goals of the Paris Agreement and United Nations Framework Convention on Climate Change.