A growing number of asset managers have pledged to achieve net zero emissions in their investment portfolios by 2050, but only around a fifth have established credible plans to get there, according to survey results.
Conducted by XPS Pensions Group, the survey gathered input from 63 asset managers to understand their current approach to integrating ESG (environmental, social and governance) and climate change risks into their business decisions.
The Review of the ESG rating of investment funds 2022 The survey found a significant increase in the number of fund management groups committing to becoming net zero by 2050, with 81% now having such a commitment in place compared to just 41% the previous year.
Yet the survey results, released yesterday, also show that only 22% of respondents have credible plans in place to back up their commitments.
Progress in integrating ESG into investment approaches also appears to have been hampered, with 24% achieving the highest ‘green’ ESG rating on XPS’ proprietary ‘traffic light’ rating system, compared to 23% in the previous year’s survey.
Meanwhile, 31% of asset managers could not provide examples of how ESG has been integrated into their funds, raising concerns about the effective application of ESG practices.
Alternative asset classes continue to lag, particularly in terms of management and engagement, while weather data coverage is limited. It also raises questions about whether enough attention is paid to ESG and climate change in these funds, according to the pension consultancy.
“Despite the emergence of anti-ESG sentiment over the past year, we remain of the view that integrating ESG considerations into investment decisions is a critical part of corporate practice. long-term sustainable investing,” said Alex Quant, head of ESG research at XPS Pension Group.
“We appreciate that a lot of effort is being put into this area across the entire investment management industry, however, it is clear that there are still areas for improvement, particularly when it comes to taking into account the climate change and communicating ESG results to stakeholders.”