Sustainalytics Insight: Asset owners speak.
Institutional asset owners, arguably among the largest and most influential of global investors, continue to pursue investment objectives on behalf of their key stakeholders with a strong and steady sense of duty and purpose.
They do have concerns, however, and these were voiced in recent discussions with Morningstar for the qualitative phase of its fourth annual Morningstar Voice of the Asset Owner Survey. In a series of in-depth interviews with 25 asset owners across North America, Europe and Asia-Pacific, this cohort shared significant concerns on four important issues related to the markets, geopolitics, regulation and sustainable investing.
Arnold Gast – Senior Director, ESG Research, Morningstar Sustainalytics:
“The interviews we conduct with asset owners every Spring play an important part in helping us understand the most important issues and questions to delve into for our annual global quantitative survey. This group is never afraid to voice their valuable opinions, and this year’s conversations were quite interesting. The main conversation points with our asset owners included concerns about the shifting geopolitical and public policy landscape, evolving approaches to ESG investing, regulatory trends impacting investment policy and moving the ball forward on climate-related investment strategies.”
Just a few of the concerns expressed by asset owners for the Morningstar market survey:
Public Pension Plan (Canada)
“Geopolitics is definitely a major concern right now. We’re also seeing signs of de-globalization— not just through tariffs, but in how these shifts may influence prices and inflation. These dynamics aren’t always immediately visible in the data, but they’re shaping the economics landscape in important ways.”
Public Pension Fund (UK)
“ESG does apply to our whole portfolio, the extent that it can be applied, of course, differed by asset class, say hedge fund, it's more difficult, but we have had a conversation with all our fund managers, we asked them to basically apply to the extent possible. And I think here is where I can make a distinction between ESG and sustainability. So, I think sustainability, maybe it's a bit more about the investment opportunities rather than just the risk…There are sectors like infrastructure issues, which is by nature, it's more conducive for us to find investment, sustainable investment opportunities in the infrastructure sector, say, compared to hedge fund. So, when it comes to ESG, it's applied across the whole portfolio. But when it comes to finding sustainable investment opportunities, we do focus on certain asset classes.”
Superannuation Fund (Australia)
“I think having standardization and requirements around regulated reporting is a necessary outcome as well. But making it as simple and pragmatic as it can be with standardized taxonomy is critical.”
Public Pension Fund (UK)
“I think our view has always been that the real world decarbonisation is more important. So we have set some medium and long-term portfolio decarbonisation targets, but they're not year- over- year targets, so that's because we want to give ourselves flexibility to pursue or give money to, to give capital to companies that may be heavily carbonised now but are on the right track for real decarbonisation.”
To speak in more detail with Arnold, reach out to Tim Benedict at [email protected] or (203) 339-1912.
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