Fund managers, keen to flex their ESG muscles, are not performing as well as they may think according to new research.
Snowball, an impact-focused asset manager, has released a report which found that portfolio managers over-estimate the impact they bring to their investments by an average of 10 percent when measured against Snowball’s proprietary best practice framework.
Of the 21 fund managers surveyed, Snowball found the highest performing asset class was private debt, with public debt managers scoring the lowest investor contribution.
The firm also found middle-aged managers outperformed younger and older fund managers while specialist managers significantly outperformed generalist managers.
Daniela Barone-Soares, CEO of Snowball, said in a statement: “Any effort to make investments work harder for society should be applauded but the fact there is still no consistent framework to measure impact is proving a real obstacle for fund managers trying to make a difference whilst delivering attractive financial returns. Our research shows that even those managers with a strong ESG culture find it difficult to measure the impact they make on environmental, social and governance issues.
“Snowball’s proprietary impact measurement framework seeks to help solve some of these obstacles and there are a number of measures we would like to see implemented across the industry. A commitment to impact leadership at all levels is crucial, as is having protection in place against mission drift, such as an asset lock or a commitment to the mission included in articles of association.”