Most asset managers want to increase ESG options: survey

More than half of asset managers want to increase their distribution of ESG products, suggests a report released Wednesday by Chicago-based Northern Trust Corp.

For the report — Driving Growth In Asset Management — WBR Insights asked 300 global asset managers during Q2 of this year: if your firm is considering or planning to increase distribution, how will you achieve this?

Nearly two-thirds (61%) selected “launch/increase ESG options,” 52% said they are considering investing in analytics to support the investment process and nearly a third (32%) said they would enter new countries.

However, just 27% of asset managers said they planned to expand their product set when asked for their strategic priorities over the next two years.

“It may be that firms plan to convert existing products to ESG offerings,” the report said. “This raises the spectre of potential greenwashing, where companies make exaggerated or unsubstantiated claims about ESG investments or products.”

Other strategic priorities identified by the asset managers included improving the investor experience (37%), creating greater efficiency (50%) and controlling costs (47%).

Firms who said they planned to launch or increase ESG options were asked to identify the greatest challenges in doing so. Nearly a third (30%) identified setting ESG investing standards and goals; 26% said data sourcing and consistency; one in four identified technology limitations; 14% cited a lack of globally recognized ESG regulatory standards; and 5% identified internal risk/compliance expertise.

“In 2022’s investment landscape, it is vital that asset managers increase distribution by targeting new markets, products and clients. However, they cannot simply expand – growth must be pursued with the right approach to avoid wasting time and resource on ill-conceived initiatives that fail to produce meaningful results,” the report said.

Of the 300 survey respondents, 15% were from Canada. More than half (56%) of all respondents had global assets under management of US$10 billion or less. Driving Growth In Asset Management was a follow-up to a similar survey Northern Trust commissioned in January 2020.

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