Just 34% of the surveyed managers added to their specialist teams over the last 12 months, compared to a figure of almost 80% the previous year, according to Redington’s fourth annual Sustainable Investment (SI) Survey.
The data also reveals that some 45% of managers have no staff at all dedicated to stewardship and engagement.
However, the findings for 2023 reveal that 80% of managers now have a dedicated ESG & Sustainable headcount overall, even if growth was flat year-on-year. This is in stark contrast to the 71% increase recorded in 2022.
As part of its annual SI Survey, the investment consultant engaged with 127 managers around the world, covering 281 strategies and an aggregate £39 trillion in combined assets under management.
Paul Lee, Head of Stewardship and Sustainable Investment Strategy at Redington, commented: “As the integration of ESG has grown, so has the resource required to support it. While wider market conditions will have impacted the latest numbers, this is a significant hiring slow-down – perhaps indicating that, as labour markets tighten, stewardship & engagement is an area that managers are willing to cut.
“We would hope that, regardless of how much resource is in place, managers are taking steps to ensure their ESG integration and engagement efforts stand up to scrutiny. However, the detail raises yet more questions around the extent to which these are actually influencing investment processes.”
On the stewardship side, some professionals appear to be busier than others. One manager reports no fewer than 13,000 individual stewardship actions – nearly 500 actions per member of its stewardship function. Seven managers report even higher possible workloads, some into the 1000s of actions.
In some cases, high workloads may be impacting output. Across all strategies, only 38% provided statistical data on specific stewardship activities. Even in cases where the strategy states it is ‘engaging for change’ as part of its stewardship approach, the level of statistical evidence rises to just 51%.
With 30% of managers once again unable to evidence ESG views driving specific changes in investment portfolios, this may be yet further evidence of manager actions falling short of ambitions – and the struggle to turn sustainability claims onto reality.
Lee continued: “Given that engagement is defined as ‘purposeful dialogue with a specific and targeted objective to achieve change’, the number of firms capturing data on this is deeply concerning. There are now a number of cost-effective tools enabling managers to capture this data, and so we really hope to see this figure increase by this time next year.
“At a broader level, this year’s survey raises clear concerns about the pace of progress on sustainability issues – at a time this is vitally needed. How can managers claim to be driving change when so many are still unable to evidence specific engagement efforts or investment decisions that were influenced by ESG in the past year? Staying still is simply not good enough.
Lee concluded: “Through our annual Sustainable Investment survey, our goal is to engage with managers to assess the effectiveness of their stewardship efforts, celebrate successes while scrutinising claims, and to help carve a path to further improvement by showcasing best practice. But of course, the data only tells us part of the story and is not, in itself, enough to drive progress.
“In the coming months we will therefore be continuing to engage with stakeholders at all levels of the industry to discuss current barriers to progress and help work towards collective action that changes our industry for the better. We look forward to sharing the output from these discussions in due course.”
|
