Size counts when influencing ESG decisions

Fund managers should use their size and influence to ensure the companies they invest in take environmental, social and corporate governance (ESG) issues into consideration, according to Colonial First State Global Asset Management (CFSGAM).

Chief executive Mark Lazberger said he believed the investment industry had a role to play in encouraging companies to make the required changes.

He said part of this responsibility also lay with investors, who were increasingly becoming alert to the importance of ESG issues and were challenging the industry to incorporate these considerations into the investment process.

Head of sustainability and responsible investment, Amanda McCluskey, said CFSGAM had learned to use its weight as a house with $150 billion funds under management to encourage companies to improve their approach to ESG. 

But she added it was still difficult to get the message through to the companies who they would most like to target.

“Companies who are doing a lot of work in the field of ESG really do want to engage … Those that are less willing to engage are obviously tough to deliver the message to, and they don’t really want to listen,” she said.

McCluskey said that as a long-term shareholder of a company, fund managers should be looking to build their relationship and trust with the company, and use that trust to influence change on ESG.

But this is a lot easier for the large-scale managers, McCluskey said.

“In Australia, we’re fortunate we’re so big,” she said.