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More firms consider ESG credentials when paying fund managers

It pays for fund managers to take on environmental, social and governance issues an Aviva survey says.

Since 2014 the proportion of investment manager firms incorporating ESG considerations into fund manager and analyst remuneration has risen fourfold to 42 per cent, according to the study by Aviva Investors’ Multi-Manager Research team.

The survey covered 61 respondents from global fund management houses which together represent in excess of £16trn of assets.

The survey showed how mainstream ESG has become as 93 per cent of asset managers recognise growing appetite from their clients [for ESG solutions], while 80 per cent have observed a rise in requests for bespoke ESG solutions.

The research also showed that over 70 per cent of respondents incorporate ESG factors into 75-100 per cent of their funds’ investment processes, up from just over 50 per cent in 2014.

Aviva Investors head of multi-manager research Isabel Emo Capodilista says: “Although 70 per cent of respondents believe ESG issues should be integrated into executive pay, just 26 per cent stated their own company does this.

“This is indicative of a struggle within the asset management industry to find consistency in its approach.”

Capodilista adds: “ESG integration has become mainstream and, by itself, is no longer a differentiator. Our findings show investors want more tailored approaches as to how ESG can work best for them.

“Similarly, one-fifth of respondents undertake ESG stress tests to better understand risks that could impact investments and how to protect against them.”

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