Asia asset managers lag behind on ESG risks
Source: Middle East Insurance Review | Jun 2023
A new report Transforming Ambitions into Actions published by WWF Singapore revealed that Chinese fund houses have shown the least progress and improvement in their efforts in addressing ESG risks.
According to the report the average assessment score of Chinese asset managers declined by 7% from last year. The 30-page report found that Asian fund managers lag far behind their European counterparts in taking nature-based risks into account as well as disclosure of responsible investing actions and governance.
Forty asset managers were surveyed comprising 22 in Europe and 18 in Asia, of which six were in China, five in Japan, five in Singapore and two in India.
The report said, “None of the Asian asset managers have voting policies and expectations on investee companies on urgent issues, like managing water risks, protecting oceans and ending deforestation.”
Only a third of Asian asset managers acknowledged nature-related risks, compared with 73% of European managers. And while only 21% of the European managers have set nature-related risk expectations on investee companies and 33% have created guidelines on the nature-related risks they will vote on, none of their Asian counterparts had done anything on these two points.
Asian firms also fare badly when it comes to governance oversight and performance incentives for portfolio managers, directors and board members. Training for portfolio managers and management is a major shortcoming among regional fund firms. Only 23% of senior management and 20% of board members of all asset managers assessed have received ESG training.
Of all the European and Asian asset managers surveyed, 74% disclose their responsible investing actions at least once a year. But that percentage would be much lower if the European managers were not included.
The report reveals that while all European asset managers report on responsible investing actions, only 38% of Asian asset managers do so. According to the report, just 33% of regional managers had alignment with the Task Force on Climate-related Financial Disclosures as well. M