The number of asset managers hiring dedicated stewardship and engagement staff has plummeted over the past year as labour markets have tightened,.
Research conducted by Redington found that just over a third of managers (34 per cent) added to their specialist teams over the last 12 months. This compared to almost 80 per cent of asset managers boosting these specialist teams in the previous 12 month period.
The survey also found that almost half (45 per cent) of asset managers have no staff at all dedicated to stewardship and engagement.
However the research — Redington’s fourth annual Sustainable Investment (SI) survey — did find that the majority of managers (80 per cent) now have dedicated ESG employees looking at sustainability issues, even if some of these teams are not specifically looking at stewardship. It says this is an increase on the year before, where the figure was just 71 per cent.
As part of its annual the investment consultant engaged with 127 managers around the world, covering 281 strategies and an aggregate £39 trillion in combined assets under management.
Redington head of stewardship and sustainable investment strategy Paul Lee says: “As the integration of ESG has grown, so has the resource required to support it. While wider market conditions will have impacted the latest numbers, this is a significant hiring slow-down – perhaps indicating that, as labour markets tighten, stewardship & engagement is an area that managers are willing to cut.
“We would hope that, regardless of how much resource is in place, managers are taking steps to ensure their ESG integration and engagement efforts stand up to scrutiny. However, the detail raises yet more questions around the extent to which these are actually influencing investment processes.”
On the stewardship side, some professionals appear to be busier than others. One manager reports no fewer than 13,000 individual stewardship actions – nearly 500 actions per member of its stewardship function. Seven managers report even higher possible workloads, some into the 1000s of actions.
In some cases, high workloads may be impacting output. Across all strategies, only 38 per cent provided statistical data on specific stewardship activities.
Redington found that 30 per cent of managers were once again unable to evidence ESG views driving specific changes in investment portfolios, this may be yet further evidence of manager actions falling short of ambitions – and the struggle to turn sustainability claims onto reality.
Lee adds: “Given that engagement is defined as ‘purposeful dialogue with a specific and targeted objective to achieve change’, the number of firms capturing data on this is deeply concerning. There are now a number of cost-effective tools enabling managers to capture this data, and so we really hope to see this figure increase by this time next year.
“At a broader level, this year’s survey raises clear concerns about the pace of progress on sustainability issues – at a time this is vitally needed. How can managers claim to be driving change when so many are still unable to evidence specific engagement efforts or investment decisions that were influenced by ESG in the past year? Staying still is simply not good enough.
Lee concludes: “Through our annual sustainable investment survey, our goal is to engage with managers to assess the effectiveness of their stewardship efforts, celebrate successes while scrutinising claims, and to help carve a path to further improvement by showcasing best practice.
“In the coming months we will therefore be continuing to engage with stakeholders at all levels of the industry to discuss current barriers to progress and help work towards collective action that changes our industry for the better.”
