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Are asset owners and their managers truly aligned on ESG?
Are asset owners and their managers truly aligned on ESG?
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Are asset owners and their managers truly aligned on ESG?

15/03/2017

Global ESG Survey 2017

In an ideal world, the goals of asset owners and their external asset managers would always be aligned. However, in the real world we are faced with the principal-agent problem - the asset owner as the principal and the asset manager as the agent - with potentially misaligned incentives and information asymmetry.

But does misalignment apply to approaches on Environmental, Social and corporate Governance (ESG)? Asset managers are able to implement and support an asset owner's ESG policy, but do they do so effectively?

BNP Paribas has commissioned a survey of asset owners and asset managers around the globe in order to understand their motivations and barriers (real or perceived) to integrating ESG into the investment process and their views on what they need to make ESG a success.

The survey looks to understand how organisations really feel about ESG’s potential impact on performance and whether they have the required tools and skills including

  • what an asset owner looks for in selecting a manager to carry out an ESG mandate (and what the asset manager thinks the asset owner needs)
  • which of the individual pillars (the E, the S or the G) has the greatest potential impact on portfolios but is the toughest to analyse and integrate
  • how organisations structure their ESG resources (dedicated teams / systems and / or external resources)
  • to which asset classes they apply ESG analysis and future plans

Indicative results (the final report will appear in May) show that asset owners are willing to apply a longer performance timeframe to measure the impact of ESG than are asset managers; and are less concerned about the ESG values they share with their asset manager than a manager would assume. In fact research capabilities and dedicated resources are the most important factors.

 

Important attributes for the asset owner when selecting an asset manager for an ESG-related mandate

 

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Which of the following are most important when selecting an investment manager for ESG-factored investments? (Select up to three)

 

However, asset owners and managers are aligned on the subject of barriers to adopting ESG – with almost half of respondents seeing a lack of robust data as the greatest barrier to further adoption of ESG.

Among those asset owners and asset managers who do NOT integrate ESG into the investment process, a lack of clarity as to what ESG actually means is the key reason for both types of investor (39% of asset owners and asset managers). This demonstrates that education and support are still required for the investment industry as is continues its journey to truly understanding and mitigating the investment risks associated with ESG.  

 

 To register your interest to receive the report, click here

 

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