Asset owners crucial in promoting ESG practices

A survey has revealed that pension funds and asset owners can positively influence environmental, social and governance (ESG) policy decisions by asset managers.

At the launch of its annual responsible investment report in London last month, First State Investments posed questions to over 100 industry figures, including asset managers, asset owners and pension fund managers.

“As active investors, we have always maintained that the incorporation of ESG factors into our investment processes will deliver significant long-term benefits to our clients”, said Mark Lazberger, First State Investments CEO.

More than half (65%) of respondents said that if asset owners pushed for better ESG practices, they could be integrated more quickly. A greater number (88%) stated that they would invest in a company that has a relatively poor ESG history but was actively working to improve it.

Will Oulton, global head of responsible investment at First State, said, “The findings of our 2013 Responsible Investment survey confirm that signals from asset owners have a significant role to play in helping to speed up the adoption of ESG factors into the investment process.

“Amongst one of the key issues debated was the role of investor engagement with companies. This is an area of continuing focus for us and one which is important to strengthen, both by our own direct activities and by collaborating with other investors where appropriate and where we can add influence and value.”

Meanwhile, 44% of respondents said an annual progress report would encourage long-term investment, with 36% opting for quarterly reporting.

Further reading:

Responsible investment terms: what is ESG?

First State annual review highlights importance of responsible investment

Poor ESG records scupper private equity deals

Investment reports reveal widespread use of ESG integration