Eight out of 108 asset managers evaluated by Morningstar for their “ESG Commitment” earned the top mark, with the largest group of firms deemed to demonstrate a basic level, according to a report from the provider’s manager research teams.

Morningstar’s “ESG Commitment Level” is a qualitative rating that aims to help investors identify asset managers’ determination to incorporate ESG factors into their investment processes and delivery sustainability outcomes, relative to peers.

The rating was introduced in 2020 with firms reviewed every two years. In a new report Morningstar laid out its assessment of 108 managers, nearly half of which have been reviewed so far in 2023. It said it found eight managers to be ‘Leaders’, 21 ‘Advanced’, 48 ‘Basic’ and 31 were marked as ‘Low’. Morningstar said the distribution “reflects the variety of the marketplace, which includes large, diversified asset managers as well as sustainability-focused firms”.

The eight that were deemed Leaders in the latest assessment are: Affirmative Investment Management, Australian Ethical, Boston Trust Walden, Domini, Impax, Parnassus, Robeco and Stewart Investors.

There were five ratings changes out of 34 firms that were reviewed for the second or third time. Wellington Management and Brown Advisory were upgraded from Basic to Advanced and Franklin Templeton and BetaShares from Low to Basic while UBS Asset Management was downgraded from Advanced to Basic.

BlackRock, Capital Group, JPMorgan, and Invesco retained Morningstar ESG Commitment Levels of Basic. Vanguard remained at Low.

ISS launches annual policy survey, seeks views on ESG politicisation risks

Institutional Shareholder Services Inc. (ISS), one of the main proxy advisory firms, has launched its annual survey about its benchmark policy, covering a range of governance and stewardship topics and number of global environmental and social matters.

The survey is a key component of ISS’s annual policy development process and is complemented by a variety of regionally-based, topic-specific roundtable discussions and other outreach.

This year’s survey begins with governance and stewardship topics specific to certain markets, such as US non-GAAP incentive pay programme metrics. It then seeks views on two global governance topics before asking questions about “a number of global environmental and social (E&S) topics, in light of evolving regulations, guidelines, standards, and frameworks, particularly regarding climate change”.

It said this was also against a backdrop of the increasing number and type of shareholder proposals on E&S-related topics over the last few years, especially, although not exclusively, in the US.

One of the questions in the ISS survey asks investors: “How tolerant would you be of a company’s reduction in transparency that resulted from risks from increased politicisation of ‘ESG’?”

The survey’s launch comes after BlackRock and Vanguard recently revealed supporting fewer E&S shareholder resolutions this proxy voting season, with the former noting a 34% increase in such proposals in the US and saying that the quality of proposals “continued to decline”.

Both firms have been criticised by conservative US politicians who say they are doing too much on ESG issues, and by activists who say they are doing too little.

Earlier this year BlackRock CEO Larry Fink said the term ESG was being “weaponised by the far-left and the far-right”.

UK Stewardship Code gains 27 new signatories

The UK Stewardship Code has 27 organisations as new signatories, according to an update from the Financial Reporting Council (FRC).

The FRC said there was a record number of signatories (277) following the latest round of applications, including 164 organisations that successfully renewed their signatory status following the spring 2023 application window. Signatories are required to report annually on their stewardship policies, processes, activities and outcomes for a 12-month reporting period.

The FRC said the growth of the signatory list was evidence of “the strength of the principles-based and flexible nature of the Code”.

It added: “The FRC is pleased to see continued growth in the assets other than listed equity covered by the Code, and continued progress in the reporting of stewardship activities and outcomes by signatories, for example, in improving the board diversity at investee companies and improved disclosure related to climate change and biodiversity.”

IPE analysis suggests that around a dozen of the new signatories appear to be asset owners, including the likes of BP Pension Fund and Pennon Group Pension Fund.

MSCI targets generative AI for climate investment help

MSCI has expanded a partnership with Google Cloud to accelerate the development of generative AI solutions for the investment industry, including in relation to climate change.

In a statement, MSCI said: “Powered by Google Cloud’s gen AI platform Vertex AI and climate technology, including BigQuery Geospatial and Earth Engine, the solutions will help MSCI clients better manage portfolio risks and opportunities and make informed investment decisions.”

The partnership will focus on three key areas, MSCI said: risk signals, conversational AI and climate generative AI.

The risk signals work is intended to significantly reduce the time clients need to analyse and arrive at actionable insights while the conversational AI capability will use natural language processing to help clients quickly answer questions and surface information about their portfolios.

The climate generative AI, meanwhile, is about using Google’s gen AI technologies to make it easier for investors to measure and manage portfolio exposure to climate risk and identify low carbon investment opportunities, MSCI said.

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