close
close

The focus on regulation is prompting investors to reconsider governance claims

Nearly one third of respondents Responsible Investorongoing governance research has changed the way they talk publicly about their engagement efforts, amid increased attention on the issue from regulators, particularly in Europe.

This includes one European asset manager who said RI their company introduced more “muted language about ESG activities.”

A representative of a larger manager in Europe said he now has “third-party confidence” in the data or case studies he uses.

This was announced by one of the British investors RI that their company “rightly added more stringency to our public claims.”

In its report on greenwashing released last summer, ESMA highlighted “baseless (empty) engagement strategies.”

Respondents to RIlatest The survey, which can be completed until May 17, asked whether regulators’ increasing focus on the issue has impacted the way their organizations talk publicly about governance.

The survey has already received almost 50 responses, with the majority of respondents coming from North America and Europe. Entries from Asia, Oceania and Africa together account for almost a quarter.

So far, investors are divided on whether management has been oversold in its ability to address the key sustainability challenges facing the world and their portfolios.

One UK investor lamented that the governance function in the investment community “is so broken it needs a complete reset”.

Another asset manager said many management efforts are not underpinned by a credible theory of change and “too often rely on companies acting against their commercial interests.”

Others disagreed that the power of commitment has been overstated, and several argued that the problem is more that its power has not yet been fully exploited.

They included a representative of a large European asset owner who highlighted the “enormous potential” that investors have to influence policy that has not yet been “tapped”.

For the minority whose faith in governance has declined over the past three to five years, several cited the backlash on ESG in the U.S. as a reason for their pessimism. Another pointed to the global political power of the fossil fuel industry.

Another topic that has generated many detailed responses is the tension between investment teams and management professionals in organizations. Many referred to the friction between the two camps, although some did not see it as a negative.

However, said a management specialist at the company that owns the assets RI that the investment team viewed them as “degrowthers.” They added that investment professionals “don’t see how management makes money.”

There is still time to share your thoughts anonymously. Click here.

The full survey results will be published later this month.