Defined Benefit
Defined Contribution
Insurance Assets
Nonprofit

Callan Study Examines ESG Practices by Investment Managers

Callan Study Examines ESG Practices by Investment Managers
clock
2 min 37 sec

Callan’s inaugural 2023 Asset Manager ESG Study revealed some notable developments and trends. The survey captured responses to Callan’s set of ESG questions from more than 1,200 investment managers across the world and spanning a broad array of public and private asset classes.

While equity was the primary asset class at 50% of the respondents, fixed income, real estate, and private markets all had meaningful representation. Not surprisingly, most (over 60%) of the respondents were small firms, less than $10 billion in assets under management (AUM), while 11% represented firms over $100 billion. Just over 80% were U.S. firms. The survey reflects data as of 3/31/23, and we expect to update it every other year.

Key Takeaways from Our 2023 ESG Study
  • ESG considerations have gained traction in recent years with nearly 75% of firms having an ESG policy and an equal percentage incorporating ESG considerations across the investment platform.
  • Callan’s proprietary ESG Score is quantitively based and is a high-level assessment of a firm’s adherence to industry best practices around ESG. The score ranges from 0-3. For all managers, the median ESG score was 2.0.
  • Nearly 70% of all managers subscribe to third-party ESG research. Not surprisingly, this is most common for public equity and fixed income managers.
  • Engagement on ESG matters is most common (>70%) for private equity managers. Equity (55%), fixed income (54%), and real estate (58%) were similar with respect to engagement.
2023 esg study
  • Larger organizations are more likely to have the resources to devote to ESG, and this is reflected in a discernable skew in several areas:
    • A higher ESG Score: The median for large organizations was 2.8 versus 1.4 for small firms.
    • A published firmwide ESG policy: Virtually all companies over $50 billion have a policy whereas only 60% of smaller companies have one.
    • A quarterly or annual sustainability report: Nearly 90% of large firms publish a report that highlights the firm’s efforts around engagement, ESG research, and internal achievements, while just over 20% of smaller firms do.
    • Full-time ESG employees: Roughly 90% of large firms have dedicated ESG employees compared to about 20% for small firms.
    • An internal repository for all ESG research: Fewer than 50% of small firms have an accessible, centralized ESG research portal while more than 70% over $10 billion have this resource.
    • Proxy voting policies that address ESG: While more than 75% of firms over $10 billion answered “yes” to this question, fewer than 50% of those under $10 billion did so.
    • Engagement on ESG topics: This is also more common for large managers (>85%) relative to small firms (<45%).

Non-U.S. organizations outpace the U.S. in a number of areas.

  • About one-third of U.S. investment managers publish a sustainability report compared to over half of non-U.S. respondents.
  • Carbon-footprinting is a more common capability outside of the U.S. Only about 40% of U.S. firms have this ability versus well over half of non-U.S. companies.
  • Slightly over 50% of U.S. equity managers have proxy policies that address ESG compared to more than 80% for those outside the U.S.
  • Engagement on ESG matters is incorporated into the investment process at more than 75% of non-U.S. firms versus just 50% for those in the U.S.

Disclosures

The Callan Institute (the “Institute”) is, and will be, the sole owner and copyright holder of all material prepared or developed by the Institute. No party has the right to reproduce, revise, resell, disseminate externally, disseminate to any affiliate firms, or post on internal websites any part of any material prepared or developed by the Institute, without the Institute’s permission. Institute clients only have the right to utilize such material internally in their business.

Posted by

Share
Share on facebook
Share on twitter
Share on linkedin
Related Posts
ESG

Interest in ESG Stays Level, Exclusive Callan Survey Finds

Hannah Vieira
Callan experts explain the results of the 2024 ESG Survey.
Operations

Inaugural Study Reveals How Asset Managers Incorporate DEI into Their Core Business

Laura Dawson
Callan's 2024 Asset Manager DEI Study examines how investment managers approach diversity, equity, and inclusion (DEI) in their own firms.
ESG

SEC Releases Final Climate Disclosure Rules

Kristin Bradbury
An explanation of the final SEC climate disclosure rules and what they mean for institutional investors.
Operations

Exclusive 2023 Study Analyzes Investment Management Fees for Institutional Investors

Ivan "Butch" Cliff
Butch Cliff summarizes his comprehensive look at investment management fees paid by institutional investors in 2022.
ESG

The Heat Is On! Carbon-Footprinting Basics for Institutional Investors

Amit Bansal
Amit Bansal explains what carbon-footprinting means for institutional investors.
ESG

S&P Global Moves Away from Numeric ESG Credit Indicators

Kristin Bradbury
Kristin Bradbury explains why S&P Global dropped its numeric credit indicators and what it means.
ESG

The ESG Rule Explained, Part 4: The DOL's Goals

ESG Consulting Group
Tom Shingler interviews a legal expert on the ESG rule issued by the Department of Labor.
ESG

The ESG Rule Explained, Part 3: Shareholder Rights

ESG Consulting Group
Tom Shingler interviews a legal expert on the ESG rule issued by the Department of Labor.
ESG

The ESG Rule Explained, Part 2: DC Plan Lineups

ESG Consulting Group
Tom Shingler interviews a legal expert on the ESG rule issued by the Department of Labor.
ESG

The ESG Rule Explained, Part 1: Fiduciary Principles

ESG Consulting Group
Tom Shingler interviews a legal expert on the ESG rule issued by the Department of Labor.

Callan Family Office

You are now leaving Callan LLC’s website and going to Callan Family Office’s website. Callan Family Office is not affiliated with Callan LLC.  Callan LLC has licensed the Callan® trademark to Callan Family Office for use in providing investment advisory services to ultra-high net worth clients, family foundations, and endowments. Callan Family Office and Callan LLC are independent, unaffiliated investment advisory firms separately registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Callan LLC is not responsible for the services and content on Callan Family Office’s website. Inclusion of this link does not constitute or imply an endorsement, sponsorship, or recommendation by Callan LLC of their website, or its contents, and Callan LLC is not responsible or liable for your use of it. When visiting their website, you are subject to Callan Family Office’s terms of use and privacy policies.