Meet The Expert - ESG Series - The role of asset managers in ESG and stewardship
Summary
Despite conversations around ESG slowing down (in some parts of the world), ESG is moving in the right direction as the underlying reasons why ESG is to be implemented haven’t changed
Active stewardship and especially systemic stewardship (where engagement is done at industry body-level and not individual company-level) are emerging as important tools for change globally
Active engagement in India is very limited and happening in silos. A concerted, collaborative approach through an India Sustainable Investment Forum (SIF) is required to yield meaningful results
Global asset owners with their own portfolio decarbonization targets expect asset managers to start putting decarbonization targets and being prepared for these requirements will hold them in good stead and help in attracting capital
Intent to change/improve, demonstrating tangible progress and credible, verified plans to decarbonize form the foundations to attract ESG-aligned capital for companies, even if they are in hard-to-abate sectors
ESG investors should have the right in-house capacities, frameworks and mechanisms to cross-check company data and ask them the tough questions to be able to differentiate themselves from other investors
Engagement with companies either to get more information and clarifications or to improve their ESG quotient can help investors reap benefits in terms of risk avoidance and/or alpha generation
Retail investors need to be enticed into the ESG funds market with more awareness campaigns and a concerted effort by all mutual funds together
As an antidote to greenwashing claims, ESG funds should show evidence of real-world impact that their fund has been able to demonstrate in terms of E,S, and G parameters
