Drowning in ESG, and everyone's a trailblazer

Who is greenwashing who?

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JPES's Miles Donohoe
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JPES's Miles Donohoe

“Drowning in it,” is how one journalist described to us the amount of ESG content they receive. From seemingly out of nowhere, Environmental, Social and Governance is dominating the agenda for asset management firms, especially in terms of branding and positioning.

There has clearly been a steady growth in interest in ESG as a theme over the last few years; but for asset managers, this appears to have gone into overdrive over the last 12 months. There are few players in the asset management industry at the moment (of those appealing to a European client base at least) who do not see ESG as a core component of what they do.

ESG investing: Is it time for an education overhaul?

It is little surprise then that asset managers are ploughing more resource into the area. Over the last year, the struggle to find appropriate ESG skills has emerged due to a war for talent in the industry, while some have talked about how they are incorporating ESG into bonus incentive structures for existing portfolio managers.

JPES Partners' 2019 Asset Management Trends Report looked at a wide range of issues facing managers; but it was the data related to ESG that proffered some truly interesting results. When we asked managers where they believed their organisation sits on the ESG spectrum, the conviction was overwhelming. Two thirds of all asset managers we spoke to believed they were either ‘Pioneers' or ‘Early Adopters' in ESG, a figure that quite simply can't reflect the actual situation.

It is among the largest managers (above €500bn), however, where the conviction becomes even more pronounced. More than 60% of the large firms we spoke to believe they are trailblazing the way forward in ESG investing for the rest of the industry. In fact, 88% of the largest houses said they consider themselves to be either a ‘Pioneer' or an ‘Early Adopter', which suggests there may be some very real misperceptions about where the industry is on ESG.

That said, there are also some clear concerns about the wider peer group, with 80% of the managers we spoke to saying they were also concerned, or increasingly cynical, about attempts to greenwash by the wider asset management industry. So who is greenwashing who?

Millennials call on investment firms for better ESG information

Well, journalists certainly aren't being taken in, as a plethora of ‘green content' hits their inboxes on a daily basis. If anything, this tide of content simply underlines their concerns about greenwashing; and this won't be dissipating anytime soon. Journalists can expect a significant increase in the amount of ESG content being produced over the next twelve months, with 85% of firms we spoke to all saying they expect to produce far more ESG content in the next year.

For those managers who are expecting to produce more, and it seems there are few who aren't, it would be prudent to take on board a comment from another journalist we spoke to recently who said most of the ESG content they receive is "relatively poor and self-serving".

Pumping information out without due consideration for whether it is even insightful can also have the opposite impact on a reputation. Whether the subject is ESG, or any number of other themes, it is not about producing more content; it is about producing the right kind that is relevant and provides an interesting perspective.

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