Australian Ethical has earned the highest level of “Leader” in Morningstar’s latest ESG Commitment Level Landscape report, the only Australian asset manager to do so.
Of the 108 global asset managers evaluated by Morningstar in its latest report, eight received an ESG Commitment Level of “Leader” and 21 earned the second highest level of “Advanced”, while 48 received an ESG Commitment Level of “Basic” and 31 earned “Low”.
Morningstar said the report is a qualitative assessment of asset managers’ determination to incorporate ESG factors into their investment processes and deliver sustainable outcomes.
“With only five firms changing ratings out of the 50 firms reviewed this year, it’s fair to say that our assessment of asset managers’ commitment to sustainability remains quite stable over time,” commented Morningstar global director of sustainability Hortense Bioy.
“This is because of our thorough and prudent analysis of the firms’ sustainable investing philosophy, ESG capabilities and stewardship activities.”
Three Australian asset managers – Alphinity Investment Management, Altius, and Melior – received an ESG Commitment Level of “Advanced”, 11 earned “Basic”, and 12 earned “Low”.
Those in the “Basic” bucket included AMP Capital, Ausbil Investment Management, Bell Asset Management, BetaShares, Dexus, DNR Capital, First Sentier Investors, Macquarie, Nanuk Asset Management, Pendal, and Perpetual.
BetaShares was previously ranked as “Low”, with Morningstar explaining that the upgrade to “Basic” was “driven by the development of ESG-related policies, rules-based sustainable offerings, and transparency of reporting, particularly in relation to proxy-voting decisions”.
Allan Gray Australia, Antipodes Partners, Bennelong, Colonial First State, GQG Partners, Greencape Capital, Hyperion Asset Management, Investors Mutual, Jamieson Coote Bonds, Magellan Group, Platinum, and Solaris Investment Manager all received “Low”.
Other ratings changes included US-based Wellington Management and Brown Advisory, which were upgraded from “Basic” to “Advanced”, and Franklin Templeton, which moved from “Low” to “Basic”. UBS Asset Management was the only downgrade, moving from “Advanced” to “Basic”.
Morningstar attributed UBS’s downgrade challenges related to its ESG integration efforts as well as the acquisition of Credit Suisse’s asset-management franchise.
“This does not mean that UBS isn’t making progress in these areas, just that it has slipped relative to other firms with Advanced ESG Commitment Levels,” the firm noted.
Turning to the world’s other major asset managers, BlackRock, State Street Global Advisors, JPMorgan Asset Management, and Morgan Stanley Investment Management earned an ESG Commitment Level of “Basic”, while Vanguard and Fidelity Investments received “Low”.
