New RI report for Pensions Funds
25 June 2008

Written by Sophie Baker

Responsible investment specialists RImetrics have published Responsible Investment 2008: an analysis and measurement of the competencies and practices of leading asset managers.

The inaugural report shows that many mainstream fund managers are improving their understanding of environmental, social and corporate governance ESG issues, and are beginning to integrate this knowledge into their investment processes. However, the report also reveals that the industry as a whole is a long way from best practice, with competencies and practices varying greatly from manager to manager.

Over half of the world’s leading 20 global asset managers, representing over $12trn of assets under management (AUM), were questioned in the research, which also found that there are significant inconsistencies across five key responsible investment themes of strategy, engagement, integration, voting and transparency and accountability.

The discrepancies in competency and practice were not only visible across the industry as a whole, but also within individual organisations. Clients are rarely consulted on the development of responsible investment strategies, global engagement with invested companies is rarely achieved, and many asset managers are unable to successfully integrate ESG knowledge and research into their investment process. Few managers were found to demonstrate any formal training and human resource planning necessary to deliver responsible investment strategies.

Bill McClory, a trustee of the BT Pension Fund, commented: “This report provides a valuable insight into mangers’ RI practices and behaviours which should stimulate trustees to ask questions of their current managers and to seek out those managers with better than average practices. This is a wakeup call to those managers who do not demonstrate good practice.”

CEO of RImetrics, Jonathan Horton, added: “There is evidence of a shift towards a greater acceptance of the ‘materiality’ of ESG in relation to both investment performance and client demand. It is clear that the maxim, ‘If you can’t measure it, you can’t manage it’ applies in this field just as much as in any other.”