Institutional and wholesale investors are ‘avoiding’ fund managers that fail to meet expectations when it comes to responsible investing, a new survey from Columbia Threadneedle Investments has found.
According to a 2021 client survey by the asset manager, “weakness” in the space is not being tolerated and 85% of client respondents said responsible investment was a vital component of the manager selection process.
Up to 72% of investors surveyed said failure to meet expectations would be a “deal breaker”.
The majority also said they believed pursing responsible investment objectives was fundamental to achieving financial outcomes, with 86% stating they felt it was a fiduciary requirement.
When it comes to determining an asset manager’s credibility in the space, fund-level reporting was considered by most to be an important signifier (85%).
A proven track record in carrying out company engagement and voting was also considered to be fundamental. As many as 76% of respondents replied in the affirmative that engagement was key, and that being a signatory of key voluntary codes and industry standards was also important.
“Our survey shows just how important responsible investment has become in serving client needs. It’s clear that professional investors will now avoid – or even divest from – asset managers that are not meeting their RI expectations, be it by way of product offering, investment approach or client reporting,” said Michaela Collet Jackson, head of distribution for EMEA at Columbia Threadneedle Investments.
“This sends a very loud message,” she added.
Investors also revealed they were prepared to divest from Article 6 funds, which are those that do not integrate any kind of sustainability into their investment process.
By the end of 2022, only one-third plan to hold investments in Article 6 funds.
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