Only 2 in 10 fund managers have clear net zero plans

Last year 41% of asset managers surveyed by XPS Pensions Group had committed to net zero.

Fund managers’ progress on integrating ESG into their investment approach had been offset with stagnation in other areas, with just 24% of managers scoring Green ESG ratings on XPS’s “traffic light” rating system in comparison to 23% in 2021.

A third (31%) of fund managers could not provide any examples of how they integrated ESG into their funds.

Alternative asset classes (including secure income, real assets and private markets) lagged behind, particularly in terms of stewardship and engagement.

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Alex Quant, head of ESG research at XPS Pensions Group, said: “Despite the emergence of anti-ESG sentiment in the last year, it remains our view that integrating consideration of ESG factors into investment decisions is a critical part of sustainable, long-term investment practice.

“We appreciate that a lot of effort is being spent in this area across the investment management industry, however, it’s clear that there remain areas for improvement particularly around considering climate change and reporting back to stakeholders on ESG outcomes.”

XPS analysed data from 63 asset managers covering 255 funds for its ‘Investment Fund ESG Rating Review 2022’ report.

The funds were assessed against eight key aspects: product, parent, people, process, pricing, positioning, performance and ESG. Within the ESG element funds were assessed on philosophy, integration, climate change, stewardship, and reporting.

The Financial Conduct Authority last month announced that it is to establish a new advisory committee to work on ESG issues, saying that it wants financial advisers to take sustainability into account when giving investment advice. 

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