Governance questions for managers

Most asset managers score poorly in independent measures of diversity and inclusiveness, despite having profited from the ESG fund boom. Why don’t more fund managers take the G in ESG more seriously?

ESG isn’t supposed to be just another investment strategy, it should focus upon processes and goals. That is a large part of the reason why it has been so popular. Those that are allocating to ESG funds, or in the investment teams at institutions who are running ESG mandates, want to make the world a better place. That includes changing governance practices.

As a result, many asset managers have demanded that corporates diversify their governance practices before they are analyzed as an investment target. Goldman Sachs Asset Management, for example, announced two years ago that they would not be investing with any corporate that did not have at least one woman on their board in the future. BlackRock and others have been equally active in pushing diversity on to corporates (although in BlackRock’s case that seems to have started to backfire.)

To read more on this story, see the December issue of The NED.