Responsible Investing – finally stepping out from the shadows?

Responsible Investment Senior Manager, Kaisie Rayner discusses the recent outcomes of the Asset Management Market Study (AMMS) and its potential positive impact for responsible investing. 

All-in-fees and a duty on fund managers to act in the best interests of investors were among the most eye-catching proposals in the final report on the regulator’s Asset Management Market Study[1].

The measures set out by the regulator built on themes that featured in the interim report[2] last year and included a desire for investment managers to demonstrate a more long-term focus. A number of respondents to the interim report proposed that environmental, social and governance (ESG) indicators should be among the factors reported by asset managers “to aid investors’ understanding of long-term performance”. The suggestion indicated a disappointment in parts of the industry that the FCA had not recognised the value of ESG in promoting a sustainable, long-term investment perspective.

So the comment that the FCA would chair a working group to consider how to make objectives clearer to investors is one that we at Scottish Widows will follow with great interest. The working group could include ESG factors among the information given to investors to help them better understand the returns in relation to objectives, under the proposal.

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Gaining positive momentum Our support of ESG Looking to the future
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PLEASE REMEMBER PAST PERFORMANCE IS NOT AN INDICATOR FOR FUTURE RESULTS. INVESTMENT MARKETS AND CONDITIONS CAN CHANGE RAPIDLY AND, AS SUCH, ANY VIEWS EXPRESSED SHOULD NOT BE TAKEN AS STATEMENT OF FACT, NOR SHOULD RELIANCE BE PLACED ON THESE VIEWS WHEN MAKING INVESTMENT DECISIONS.

[1] FCA: Asset Management Market Study (Final report)

[2] FCA: Asset Management Market Study (Interim report)

[3] Law Commission: Pension Funds and Social Investment

[4] Pensions Regulator: Investment Governance

[5] Pensions and Lifetime Savings Association: ESG risk in default funds – Analysis of the UK’s DC Pension Market

[6] Principles for Responsible Investment: About the PRI

[7] Schroders: Global Investor study 2016

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