In a similar vein to passive products, assets managed in environmental, social and governance (ESG) mandates by the 500 largest asset managers in the world rose by 23.3 percent last year, in stark contrast to their overall assets under management which declined by 3 percent on a year-on-year basis.
The information comes from the Thinking Ahead Institute, which also found that assets in ESG mandates have increased by 17.8 percent this year.
Sustainability and the importance of culture in the effective practice of investment organisations were key areas of interest in 2018. The report notes that connecting the dots from culture to strategy, to beliefs and values, and to vision and mission, has become a critical leadership challenge and opportunity.
A stronger underlying purpose, beyond the pursuit of only growth and profit, is identified as a differentiating factor in an overcrowded industry facing a challenging environment. Client interest in sustainable investing, including voting, increased across 83% of the firms surveyed.
Bob Collie, head of research at the Thinking Ahead Institute, noted: “Sustainability has now become an unavoidable issue and talk on sustainability is becoming action. There is obviously a saying-doing gap in a lot of places, but perhaps more important right now is the doing-impact gap: our ability to create a more sustainable economy lags behind the desire. The most meaningful efforts on this front are the ones focused on closing that gap.
“There is also a growing appreciation of the importance of culture. Good culture does not appear by accident, and our ability to assess and adapt it is developing. There’s room for improvement here.”
The research also found that some 242 names in the 2008 list of the global 500 asset managers are not found in the 2018 list. Whilst the past decade has been a fairly benign environment for asset managers with rising markets and strong margins, most observers expect increased pressure in the coming years from rising regulatory activity, fee compression and the high cost of technology.
The Thinking Ahead Institute was established in January 2015 and is a global not-for-profit investment research and innovation member group made up of institutional asset owners and service providers. It has over 40 members around the world and was spun out of Willis Towers Watson Investments’ Thinking Ahead Group which was set up in 2002.
