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ESG-related client behaviors

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climate-related client behaviors

In-brief

ESG-related considerations have already changed the way asset owners behave towards asset managers. International frameworks are driving these behavioral changes, making them ‘benchmarkable’. Accomplish’s next project will identify current and future ESG-related client behaviors, and how asset managers are responding.

Asset owners’ new behaviors

In the year 2019 to 2020, the volume of climate-related disclosures by companies increased more than in any other, with 50% of firms making at least three recommended disclosures. Europe leads the way and, in particular, the materials, building, and insurance industries are forging ahead. (TCFD, 2021)

This growing supply of data is a significant development, but what effect has it had on the behavior of asset management clients?

In 2021, research by CREATE et al found that climate-related considerations have already changed the way asset owners behave towards asset managers. In particular, the chart below shows the new criteria that clients consider when selecting an investment manager. 

Manager selection criteria for climate change Reproduced with the permission of CREATE.

asset owners consideration

For example, the most important consideration is the track record on stewardship and proxy voting. This will result in a request for an asset manager’s proxy voting record, which is a specific, observable, and measurable behavior.

‘Benchmarkable’ behavioral changes

This case study is important because it indicates the influence of international frameworks like the TCFD (Task Force on Climate-Related Financial Disclosures) on the behaviors of producers and consumers of sustainability information.

Because a central framework is driving the changes in behavior, we believe they will display a material degree of standardisation. This means that not only will they be measurable – they will also be benchmarkable.

Stepping back from the environment, the broader framework of sustainable investing considers not just environmental factors in investment decisions but also ones that relate to society and governance – ESG.

This situation raises three questions for asset managers:

  • What is the full set of ESG-related client behaviors?
  • How are they and their peers responding?
  • If client behavior is evolving in response to ESG, what are the likely future behaviors and requests asset managers should plan for?

Research project: ESG-related client behaviors

Answering these questions is important because it will help asset managers serve the evolving demand for ESG information as efficiently as possible.

For these reasons, Accomplish’s latest research project will identify what clients are actually requesting from asset managers in relation to ESG, how firms are responding, and how their requests might change in the future. In particular, we are thrilled to have joined forces on this initiative with Harald Walkate, a Senior Fellow at the University of Zurich’s Center for Sustainable Finance & Private Wealth (CSP).

Accomplish’s research projects are its free gift to the investment industry. Contribute to the research and, in return, receive the findings and an invitation to the industry discussion of their implications. If you would like your firm to participate, book a 60-minute interview in either April, May, or June. Early take up has been strong and we expect anywhere up to 30 to 40 asset managers to participate. 

Adam Grainger

Adam Grainger

Behavioral analytics | Business intelligence | Asset management