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September 4, 2023

ESG review highlights importance of hiring specialists

Business people team meeting
Morningstar’s report emphasises the importance of asset managers’ sustainability teams (Photo: Pondsaksit/Envato)

A Morningstar review of asset managers’ commitments to sustainability notes that top performers tend to concentrate on building well-staffed teams of experts.

In a new report on ESG commitment, Morningstar evaluated 108 asset managers against three criteria: philosophy and process; resources; and active ownership. The study emphasises the importance of asset managers’ sustainability teams as part of its assessment. 

“The asset managers who sit at the higher end of the spectrum boast well-staffed, well-integrated teams of sustainable investment and stewardship experts in addition to robust, effective ESG data and research,” the report says. 

All investment professionals at the best companies “possess a certain level of proficiency in sustainability topics, and designated specialists are committed to advancing knowledge of sustainability themes, both within the organization and for the industry at large”, Morningstar continues.

Where companies lack in-house expertise, the best in class may work with academics or industry groups, it says.

Recognising Robeco as a “leader”, the report acknowledges the high turnover within its sustainability research team, but it says the manager has replaced departures sufficiently and has bolstered its capability with experts on areas including biodiversity.

BNP Paribas Asset Management, meanwhile, has been given an “advanced” score. Although it has a higher turnover level in its ESG team than its counterparts — which Morningstar describes as “concerning” — the asset manager has made attempts to improve retention and has more than replaced departing staff, it says.

Wellington Asset Management has been upgraded from “basic” to “advanced”, with Morningstar recognising that the manager has accelerated its ESG efforts with hired specialists for set objectives. In 2021, Wellington built an impact measurement team, which the report says “significantly improved the firm’s disclosure capabilities by means of detailed, strategy-specific ESG and carbon reports”.

Morningstar downgraded UBS Asset Management from its advanced to basic bracket of managers, in part because of the company’s acquisition of Credit Suisse, which Morningstar believes will absorb resources and management attention and hinder the manager’s progress on ESG. 

A UBS spokesperson said: “Following the acquisition of Credit Suisse, our ambition is unchanged: to be a global leader in sustainable finance.

“UBS and Credit Suisse have complementary sustainable finance offerings and our goal is to, over time, integrate Credit Suisse’s sustainability capabilities into our existing governance, structure and standards.”

You can read the full report here (though you’ll need to share your email address with Morningstar first).

A service from the Financial Times