Asset owners in Europe are increasingly demanding for proof that asset managers have sustainability embedded into their firm culture, according to a report by Cerulli Associates.
The study highlighted that climate change is the most important ESG issue in Europe, with nearly 77% of insurance companies and over 50% of pension funds addressing it in their responsible investment policies.
However, nearly 70% of European asset owners who took part in the survey do not set carbon-footprint reduction targets for externally managed portfolios.
Justina Deveikyte, associate director in Cerulli’s European institutional research team, said: “Although climate change is the key topic addressed in many European asset owners’ responsible investment policies, not many set targets to reduce climate-related risks or report their performance against these targets.”
ESG capabilities were said to be integral to European asset owners’ manager selection.
Connor Bigland, an analyst in Cerulli’s European institutional research team and co-author of the report, said integration of ESG personnel was the most important factor asset owners assess during their selection process.
“This factor reflects how well a manager has embedded ESG into their firm culture, which is of growing importance to European asset owners,” he added.
The survey also found that 68% of insurer respondents and 63% of pension fund respondents plan to switch from passive to more active investment approaches to improve ESG integration over the next three to five years.
Of the 160 institutional investors that took part, 62 were insurers and 98 were pension funds and they managed over €5 trillion of assets. There were also 20 asset managers with nearly €5 trillion in European assets under management.
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