RI Annual Report 2023
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Facing forward
The time is always right for responsible investment
2023 was a complicated year for asset managers. Global markets were subjected to persistent inflation, political turmoil and the effects of climate change. Many investors retreated into defensive positions and cash alternatives. However, as we begin a new year, I’m encouraged by what I see.
We put decarbonization into practice In keeping with our commitment to RI and investors’ prefer- ences, we have continued our efforts to help clients decarbon- ize their portfolios. In an effort to achieve real-world change, our Global Climate Engagement Strategy is taking a unique contrarian approach by engaging with companies often excluded by ESG enthusiasts. Many currently high emitting sectors will remain central to the world economy after the energy transition is completed. We therefore strive to push them towards green transition through firm and consistent engagement already now. Many investors are looking for broader-based portfolios that could help them achieve their decarbonisation goals. To meet this need, we have worked side-by-side with clients to inno- vate bespoke beta plus, credit and fundamental equity solu- tions that fulfil their carbon commitments. Decarbonising portfolios are high priority for many clients as they will need to make good on emissions reduction pledges – hence, we will continue this type of collaboration over the coming years.
The integration of ESG/sustainability into investment decisions is gaining momentum, driven both by regulatory activity and real-world concerns. Morningstar’s annual Voice of the Asset Owner Survey 2023 reported that “more than two thirds of asset owners (67%) believe ESG has become more material to investment policy in the past five years, with environmental factors driving materiality.”3 Responsible Investment is a long game. With issues such as cli- mate, biodiversity and human rights at the top of the agenda for authorities and conscientious investors, companies unable to live up to the rising level of due diligence required will be increas- ingly locked out of the world’s largest markets. While 2023 saw a handful of investors backtracking on their climate commit- ments, these were overwhelmingly dwarfed by the number of entities seeking to strengthen sustainability pledges.4 That is why in 2023 we remained focused on decarbonization, ramped up our engagement activities, expanded our diversity horizons and gained critical recognition for fighting the good fight.
3) Nearly 70% of Asset owners say ESG has grown more relevant to Investment process, Morningstar.com, 4 Oct 2023. 4) ESG trends in 2023, PwC.com.au.
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