Finding 1: Only four asset managers received an AA or A grade for their approach to responsible investment, while 35% of assessed managers received a D or E grade.
Finding 2: There was a wide variation in performance across the sector, with only a small number of asset managers performing well consistently across all themes.
Finding 3: Some asset managers have shown sharp changes in performance since 2020.
Finding 1: Only four asset managers received an AA or A grade for their approach to responsible investment, while 35% of assessed managers received a D or E grade.
Most asset managers have an insufficient approach to responsible investment, despite many being keen to promote their responsible investment credentials. Only four received an AA or A grade – in ranking order: Robeco, BNP Paribas AM, Aviva Investors, and Legal & General IM – showing that investors can be responsible, and none received an AAA grade, indicating that all can still make improvements (Figure 1).
More than two-thirds of the managers surveyed received a CCC rating or worse. Since 2020[1], there has been a slight drop in the number of asset managers achieving AAA-A or BBB-B grades. It is, however, encouraging that the proportion of managers graded D or E – indicating they are performing significantly worse than their peers – has fallen, from 51% in 2020 to 35% in 2023.
Figure 1: Number of asset managers in each rating band
Finding 2: There was a wide variation in performance across the sector, with only a small number of asset managers performing well consistently across all themes.
The best performer overall was Robeco, which achieved the only AA grade. Robeco had the highest scores for governance and stewardship, and placed in the top six in all three thematic sections: climate, biodiversity, and social issues. BNP Paribas AM also placed in the top 10 managers in all five sections, and achieved the highest combined score across the three thematic sections. Five other asset managers – Aviva Investors, AXA IM, Legal & General IM, Schroders, and Swedbank Robur – also scored consistently well and were in the top 25 managers in each section.
Most managers had some better and worse performing areas, highlighting where much progress needs to be made. But some showed consistently poor approaches to responsible investment. Six of the survey respondents were outside the top 50 in every category: E Fund Management, Franklin Templeton, Mitsubishi UFJ, State Street GA, Vanguard, and Vontobel AM. Mitsubishi UFJ and Vanguard received the lowest score of all respondents in the three thematic sections combined. Mitsubishi UFJ were in the bottom 11 managers for all five topics, while Vanguard has no clear policy on either climate or biodiversity.
Whilst most of the asset managers who chose not to complete the survey and verify the data finished in the bottom 20 overall, some demonstrated good practice in particular areas through their public disclosures. PGGM Investments and NN IP achieved CC ratings and finished in the top half of the overall ranking. Others achieved top 20 results in individual sections: Eastspring Investments (governance), Goldman Sachs AM (governance), Insight Investment (climate), and Ping An AM (governance and biodiversity).
Finding 3: Some asset managers have shown sharp changes in performance since 2020.
Among asset managers who featured in both this survey and the 2020 one, most held a relatively consistent position in the ranking. However, some rankings changed significantly.
Five asset managers – Deka Investment, JP Morgan Asset Management, Santander Asset Management, SEB Investment Management, and T. Rowe Price – improved by more than 30 places (JP Morgan gained almost 60), among a comparable sample[2] (Table 2). Their improvements have come from the adoption of effective policies across one or more of the themes we investigate, more robust stewardship practice (including, for example, formalised engagement guidelines), and the adoption of a framework for positive climate-related investment. Different asset managers made specific improvements in different areas: SEB IM was stronger on climate- and biodiversity-related issues, while T. Rowe Price performed better in stewardship and on social issues. However, these five asset managers did not represent best practice across the survey in general, despite their improvements.
Table 2: The five asset managers whose ranking improved the most
Conversely, some asset managers lost significant ground relative to others since 2020 (Table 3). They include some who performed relatively well in 2020, such as NN IP and PGGM, as well as weaker performers such as State Street GA. Biodiversity was a particularly weak area for all five of the asset managers whose ranking declined the most. PIMCO was also held back by its stewardship performance, and Allianz and State Street by their governance. Rather than evidence of their performance deteriorating, it is likely that the five have simply not kept up as standards have improved across the sector since 2020.
Table 3: The five asset managers whose ranking deteriorated the most
Neither fatalism nor complacency is justified when it comes to responsible investment, as these changes show. Asset managers can improve even under less-than-supportive regulatory environments, while even progressive European managers can easily lose ground.
Footnotes
[1] The questions in the two surveys differed, due to changes in achievements and aspirations for responsible investment practice over time. Grades therefore give an indication of progress but are not directly comparable.
[2] The 2023 survey included a slightly higher proportion of Chinese asset managers, but the overall number of participants is roughly the same, and changes to the sample or questionnaire alone would not account for such significant shifts in ranking.