LONDON — Global asset managers controlling trillions of dollars are failing to invest in a way that will protect climate, biodiversity and people, despite efforts by the industry to promote its sustainable finance credentials, the corporate responsibility group ShareAction said on Sunday.
Investment strategies which consider environmental, social and governance (ESG) risks, or invest in companies which look to have a positive impact on climate, people and the natural world, have raised trillions of dollars globally.
Yet, two-thirds of 77 asset managers surveyed, which control $60 trillion of assets, had “serious gaps in their responsible investment policies and practices,” the group found based on an analysis of their policies.
These include a failure to assess and prevent negative impacts on nature or include Scope 3 emissions, those tied to a company’s value chain, in climate targets.
“As managers of tens of trillions of dollars … their decisions have a vast impact all over the world. … (but) there remains a lack of ambition to drive real-world improvements,” said Claudia Gray, head of financial sector research at ShareAction.
ShareAction assessed managers on several hundred indicators, including their holdings of fossil fuel investments; whether they have set shorter-term emissions reductions targets and how they integrate biodiversity policies into decision-making.
Among the biggest improvers was J.P. Morgan Asset Management, which rose almost 60 places to 13th after adopting social and biodiversity policies, as well as engaging on topics such as human capital management, the group said.
ShareAction also found the portion of managers performing significantly worse than their peers has fallen from 51% in 2020 to 35% in 2023. (Reporting by Virginia Furness; Editing by Aurora Ellis)