The majority of global asset owner executives expect to make ESG-related manager changes affecting more than 10% of their total assets over the next five years, according to new research from Coalition Greenwich.
The growing scrutiny among asset owners has come as the vast majority of asset owners have come to incorporate ESG considerations throughout their portfolios, according to 305 telephone interviews conducted with global asset owners from June through August.
Globally, 75% of interviewed executives employ ESG strategies, with the greatest percentage — 92% — seen in Europe, and the smallest — 53% — seen in North America. In Asia, 76% of those interviewed say they employ ESG strategies.
Among those who said they employ ESG strategies globally, 56% said they integrate ESG factors into their entire investment philosophy. By region, that overall integration percentage was 61% in North America, 60% in Europe and 43% in Asia.
Globally, 73% said ESG is important in manager selection, and by region, that was 87% in Europe, 78% in Asia and 49% in North America.
That level of importance will lead to changes in external managers, according to the report. Globally, 52% of current ESG investors said they plan to make manager changes for more than 10% of their total assets over the next five years. By region, 61% of European asset owners plan to make manager changes affecting more than 10% of total assets, 57% of Asian asset owners and only 28% of North American asset owners plan to make those levels of changes.
"Many of these institutions are evaluating managers' ESG approaches during the early stages of their manager selection process," said Mark Buckley, global head of investment management at Coalition Greenwich, in a news release Tuesday announcing the research. "Managers who fall short on ESG could be eliminated from consideration early in the process."
Selected results from the 2022 ESG Research report are available on Coalition Greenwich's website. Registration is required.
