(Sunday 26th February) The world’s largest asset managers are typically doing nowhere near enough to address the most dangerous human and natural crises of our time, according to a report released today by ShareAction.
The Point of No Returns report ranks 77 major asset managers, who in total control over $77 trillion of assets under management, from best to worst in a league table. It found that the vast majority have consistently failed to invest in a way that will protect climate, biodiversity and people.
Two-thirds of the managers surveyed – handling $60 trillion in assets - scored a CCC rating or worse, indicating serious gaps in their responsible investment policies and practices for at least one section we analysed. The four biggest asset managers in the world – Blackrock, Vanguard, Fidelity Investments and State Street Global Advisors – all scored poorly, receiving either D or E grades, meaning those managers with the greatest influence are coming worst in class.
Claudia Gray, Head of Financial Sector Research at ShareAction, said: “A majority of the world’s largest asset managers are failing to meet even basic criteria, let alone take the steps needed to help protect people and planet for generations to come.
“The impact of the decisions these asset managers make cannot be understated. As managers of tens of trillions of dollars, and investors in the biggest companies from many industries, their decisions have a vast impact all over the world. They should be considering their effects on our climate, the ecosystems providing our life-support systems, and human wellbeing worldwide. These problems create real risks for the big companies and their investors, but as our research has uncovered, there remains a lack of ambition to drive real-world improvements.
“We did see some surprising and inspiring green shoots of progress, with some well-known names making significant improvements, and European asset managers in general leading the pack. But as global standards remain so low, almost every asset manager needs a jolt to the system. We are running out of time to act on these global problems if we want to avoid catastrophes.”
The report is the latest in a biennial series from the charity, now ranking 77 of the world’s largest asset managers in Europe, USA and Asia Pacific on whether their investment policies meet basic responsible criteria, including on climate, biodiversity, social, governance and stewardship.
The report found a huge geographical split between the asset managers. The best from Europe vastly outperformed their regional rivals in the US and Asia Pacific, filling every spot in the ranking’s top 10. US managers received the worst grades more than three times as frequently as their European rivals.
That said, even the top performing asset managers in the survey have a biodiversity blind spot, often failing to take into account the protection of important habitats such as forests, rivers and oceans when managing their investments. Addressing the global extinction crisis and loss of nature’s benefits to people remains a priority, the report notes.
There were some more positive findings, including from well-known names Santander Asset Management and JP Morgan Asset Management, who soared up the rankings since ShareAction’s last report in 2020, in part thanks to their adoption of frameworks for their climate-related investments. The robust policies of the four highest-ranking asset managers – Robeco, BNP Paribas, Aviva and Legal & General - show that investing can be both responsible and profitable, even for those managers of a considerable size.
The report sets out a series of recommendations for asset managers, asking them to identify, manage and report on the real-world impacts of investment decisions on sustainability issues, including climate, biodiversity and social issues. ShareAction is also urging asset owners to use their influence to hold asset managers to account, and policymakers to introduce regulation that improves minimum standards across the entire industry.