A third (33 per cent) of investment managers have no one at board director level with responsibility for the oversight of environmental, social and governance (ESG) and stewardship, according to analysis from LCP.

The consultancy’s biennial Responsible Investment Survey also revealed that 69 per cent of managers have mandatory responsible investment training for staff, yet less than a quarter (23 per cent) have mandatory training for board members.

In light of the findings, LCP emphasised that ensuring there is clear senior leadership, knowledge and oversight of ESG issues will be “crucial”, particularly with policy and societal expectations in this space increasing by the day.

However, the results also suggested that managers have been taking ESG issues more seriously in recent years, with 96 per cent of managers surveyed signatories to the UN Principals for Responsible Investment, compared to 66 per cent in 2016.

A further 36 per cent of managers also said that they had already published a firmwide taskforce on climate-related financial disclosures (TCFD) report, despite there being no current regulatory requirement for this.

However, LCP warned that whilst many managers are improving their responsible investment practices, they are not keeping pace with the rapid growth in expectations, with a fall in the proportion of investment managers awarded a top grade on their approach to ESG and stewardship since the last survey in 2020.

Indeed, the survey revealed that although 42 per cent of managers said that they were targeting net-zero emissions for assets under management, 65 per cent did not have a clear plan in place to achieve this.

“While it’s clear that addressing climate change is very much on the agenda for investment managers, their net-zero commitments need to be backed up by clear plans as to how to meet these targets by 2050, and we would also expect managers to improve reporting of climate-related metrics, where coverage of portfolios is still relatively limited," LCP senior consultant, Sapna Patel, commented.

Adding to this, LCP head of responsible investment, Claire Jones, said: “It’s encouraging to see many investment managers stepping up to the plate. The majority are taking ESG issues and stewardship much more seriously, with many making their voices heard through voting and improving reporting on climate change ahead of it being a regulatory requirement.

“However, its concerning that there is a significant number who don’t have appropriate board oversight, which is out of step with the rapidly increasing expectations in this space.”

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