Governance at the top of ESG priorities: study

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Asset managers prioritize governance and active engagement over other ethical investing issues, new research finds.

Russell Investments Annual ESG survey of managers found that among the majority (80%) of the 369 global asset managers surveyed, governance is the most important environmental, social and governance factor.

Australian and New Zealand managers, meanwhile, believe climate risk and environmental issues are the most pressing concerns, but only a minority (14%) said environmental concerns drove investment decisions.

Despite lagging behind their European counterparts, the study found that 95% of Australian managers are now integrating ESG into their investment processes. Although this is a marginal increase of 2% from 2020, it marks a 9% increase from 2019.

Some 97% of European managers and 82% of American managers integrate ESG into their investment processes.

Australia and New Zealand (55%) lead the United States (47%) and Canada (52%) when it comes to recruiting ESG experts (55%).

Meanwhile, Europe and Japan (88%) lead the pack, followed by the UK (63%) and Asia excluding Japan (60%).

The survey also revealed that the investment industry continues to suffer from a lack of diversity.

Just over 260 companies surveyed have less than 20% female managers, with a stronger representation of female senior investment managers in Asia excluding Japan, Canada and the United Kingdom.

UK, Europe and US have the best gender diversity in terms of board members.

Russell Investments head of responsible investment Jihan Diolosa said last year’s study indicated that ESG is no longer an optional addition but rather an essential part of decision-making.

“Asset managers have certainly taken this to heart, which is reflected in the improvements we have continued to see over the past 12 months. We are also starting to see the potential beginnings of an evolution in the way managers prioritize with several regions including Continental Europe and Canada, increasingly focusing on environmental factors as a result of the priorities set by their clients. She said.


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