Don't just take a manager's word on ESG: panel
Greenwashing arose from ‘woeful’ disclosure and investors need to look under the bonnet and not just take the word of the product or fund manager about their environmental, social, and governance (ESG) work, according to a panel.
Speaking at the Australian Institute of Superannuation Trustees (AIST) Superannuation Investment Week virtual conference, Aware Super head of responsible investments, Liza McDonald, said her advice to trustees and investors was to do their due diligence.
“Lift the bonnet and don’t just take the word of the product or manager that are telling you they’re doing it. If funds report to say they are contributing to SDGs [UN Sustainable Development Goals] but can’t give you reporting or metrics of they say they are solving then that’s a huge red flag,” she said.
Also on the panel, DWS (US) global head systematic investment solutions, Fiona Bassett, said greenwashing was a huge problem that rose from woeful levels of disclosure but that there were a number of disclosure initiatives, especially in the EU, that were a huge step forward.
“One of the things to look at is the KPIs – it’s something we are focused on to measure our own progress with third party auditors,” she said.
“And if you want to understand who is greenwashing and who is not you should look at a fund’s stewardship. Go look at their proxy voting records because this will tell you everything.”
Bassett said DWS also used multiple sources of data sets to help cross reference and validate the ESG data they were looking at.
“If you had 100 of my peers in a room, the majority would be using only one data source,” she said.
After using multiple data sets, Bassett said her firm would then rank companies based on whether people were leaders or laggards and would integrate ESG into the portfolio around those metrics.
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
