Asset managers are including more and more often climate risk in investment decisions. This is what emerges from the ESG (Environmental, Social and Governance) survey conducted by the Multi-Manager Research team of Aviva Investors.
In particular, the research found that 80% of asset managers "always" or "often" incorporate climate risk into their investment decisions. Conversely, only 2% said they have “never” included climate risk in their decision-making process.
Furthermore, according to the survey, almost three out of five asset managers (58%) say that the pandemic has accelerated the adoption of ESG investments from investors, as companies respond to increased pressure from retail and institutional investors to consider environmental and social risks, as well as the greener opportunities brought about by the Covid recovery efforts.
Not only that: among the asset managers surveyed, 60% link executive compensation to ESG performance, more than double the 28% in 2019.
“Asset managers are clearly showing that fossil fuels and carbon-intensive industries will have a reduced role in portfolios going forward, with 87% of managers surveyed predicting a structurally lower exposure in these areas. More surprisingly, asset managers argue that climate change is already well integrated into investment practices".
The sore point concerns ethnic and gender diversity. The survey found that 58% of asset managers believe that female representation on boards of directors is below 30%, while 61% of companies have no ethnic representation. “As many are making commitments to executive-level goals, how and how quickly this gap narrows will be important indicators of commitment to diversity,” the survey concludes.
