Asset managers are failing to implement their climate engagement strategies, with gaps appearing when companies were asked to prove the track record of managing their funds.
In Redington’s Annual Report Sustainable Investing Surveywhich in 2022 encompassed 122 asset managers in various geographies, covering 232 strategies and a total of £37.7 billion in assets under management, it was found that 92% of strategies report prioritizing climate in their engagement efforts.
However, Redington found a 34% shortfall with only 54% of strategies indicating they are tracking and reporting on engagement activities.
For asset managers who address, track and report on stewardship at the strategy level, 98% say climate change is a priority in their engagements with beneficiary companies, as they do for other issues such as such as human rights (87%), biodiversity (80%), pollution and waste (84%) and business ethics (80%).
However, when showing the issues they actually engaged in over the past 12 months, the numbers are lower in all cases – at 72%, 59%, 40%, 49% and 38%, respectively.
Redington also reported that only 26% of respondents said they voted on 100% of resolutions, down from 43% in 2021.
“The untapped potential for engagement is a notable theme in this year’s findings and a trend from which climate change is unfortunately not exempt,” said Anastasia Guha (pictured), head of sustainability investing at Redington.
“While nearly every manager we spoke to highlighted climate as a priority in their engagement efforts, many were unable to provide any evidence of engagement on the issue, which makes real progress hard to track.
“At this stage, managers should use all the tools at their disposal and exercise voting rights to the greatest extent possible, leveraging their influence to have a positive impact on the management of the company.”
Among other survey results, 87% of managers say they integrate climate into their investment processes – an increase from 80% last year – but at the strategic level, 63%) actually perform risk assessments and only 67% monitor emissions-based measures.
Meanwhile, 59% of managers have a net zero goal at the company level, but similar goals only cover 34% of their strategies.
Guha noted that translating “rhetoric into reality” is a challenge for the asset management industry, but cautioned that they should not be comfortable with “letting enterprise-level progress obscure a lack of action in individual strategies”.
“The discrepancy between company-level statements and what is delivered as part of strategies is a particularly notable trend in this year’s findings and a distinction the industry needs to address sooner rather than later.”