Australian Ethical remains the only Australian asset manager to rank as an ESG commitment “leader”, according to Morningstar’s latest ESG Commitment Level Landscape report.
Of the 97 global asset managers that have been evaluated by Morningstar, eight received an ESG commitment level of “leader” and 25 earned the second highest level of “advanced”, while 42 received an ESG commitment level of “basic” and 22 earned “low”.
The research house said the report is a qualitative assessment of asset managers’ determination to incorporate ESG factors into their investment processes and deliver sustainable outcomes.
“More than ever, sustainability-focused investors should be discerning when selecting asset managers as ESG integration practices, resources, and active ownership activities can vary significantly,” commented Morningstar global director of sustainability research Hortense Bioy.
“Many firms have improved their practices over the past couple of years, raising the bar for the industry overall.
“Some have ramped up their efforts faster or to a greater extent than others, and this is reflected in the higher number of upgrades this time round and more firms rated at advanced. Almost a third of the 97 asset managers in our coverage now earn a Morningstar ESG commitment level of advanced or leader,” Ms Bioy continued.
Namely, 12 firms were reviewed for this quarter’s report, five of which recorded ESG commitment level upgrades – Comgest, Fidelity International, and Picket were upgraded to “advanced” from “basic”, while Janus Henderson and Man Group advanced to “basic” from “low”.
In explaining Fidelity International’s upgrade, Morningstar said the change was driven by the firm having put sustainability at the “forefront of its agenda” since 2019, having invested in resources, alongside developing frameworks for integration and refining its approach to active ownership.
In early 2023, Janus Henderson also hired its first chief responsibility officer, with the research house affirming that under this new leadership, it had strengthened the integration of ESG factors across its line-up and expanded its personnel focus on ESG and stewardship.
The firm’s upgrade from “low” to “basic” was attributed to the recent revamping of its sustainability program, but Morningstar conceded that Janus Henderson still has a ways to go in matching industry counterparts.
“Overall, the firm is headed in the right direction, but more transparency would bring JHI closer to par with peers,” it said.
Meanwhile, three Australian asset managers – Alphinity Investment Management, Altius, and Melior – maintained their “advanced” status, while seven earned “basic”, and an equal seven earned “low”.
Those in the “basic” bucket included Ausbil Investment Management, Betashares, Dexus, DNR Capital, First Sentier Investors, Macquarie, and Pendal.
Allan Gray Australia, Antipodes Partners, Bennelong, GQG Partners, Hyperion Asset Management, Platinum, and Solaris Investment Management all received “low”.
Turning to the world’s other major asset managers, BlackRock, State Street Global Advisors, JP Morgan Asset Management, and Morgan Stanley Investment Management earned an ESG commitment level of “basic”, while Vanguard and Fidelity Investments received “low”.
