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‘ESG investing olympics’ state of the sector report launched

Analysis of ESG proposals from 60 investment managers with combined assets under management of £15 trillion has revealed serious gaps in ESG market standards according to Friends Provident Foundation's new ‘state of the sector report 2020’.

The 60 proposals were submitted for the ‘ESG investing olympics’, a first of its kind open competition for an investment mandate of £33.5m from three charities, with the key instruction simply to ‘impress us’ on ESG integration and impact.

Our analysis is based on these proposals and reveals the areas where standards are still falling short of minimum expectations, as well as recent improvements and emerging best practice. It concludes that the sector’s priority should be to address the most basic and serious gaps which, if unaddressed, risk damaging the credibility of the booming ESG market.

The publication of the report is accompanied by ‘ESG investing olympics’ winner Cazenove Capital launching its new Sustainable Growth Fund.

We ran the ‘ESG investing olympics’ to bring greater transparency to the world of investment management, help establish what emerging ESG best practice looks like, and to send a message that asset owners want investment with purpose. We are delighted to have a shared vision with Cazenove Capital for the new Sustainable Growth Fund. One that includes pushing the boundaries of sustainable investing, radical transparency, and a new collaborative approach with active client participation.
Stephen Muers, Chair of Trustees, Friends Provident Foundation
With the exponential growth of the ESG market and new entrants including some of the world’s largest managers, there is enormous potential to effect real positive change. But there are also risks to the credibility of ESG as a concept if the approach taken is too piecemeal or tokenistic. Our report shows that many asset managers do not currently meet standards which we would consider to be basic tenets of ESG , but many were willing to adhere to win the tender. The best proposals met and exceeded them, but for some winning would have meant the type of behavioural change that is required across the market if it is to be authentic. It would appear the only barrier to meeting these standards is the will to do it. To help effect that change we hope other asset owners will consider our recommendations as minimum ESG standards in investment manager tenders and reviews. We are delighted to be cornerstone investors in Cazenove Capital’s new best in class fund and look forward to a pioneering collaboration. In the spirit of the ‘ESG investing olympics’ we will continue to publicly share what we learn.
Colin Baines, Investment Engagement Manager, Friends Provident Foundation