21 March 2017
Reporter: Stephanie Palmer

ESG changing the face of asset management

The role of the asset manager is evolving as a more challenging regulatory environment and changing demographics bring environmental, social and governance issues to the fore, heard attendees at the ALFI European Asset Management Conference in Luxembourg.

One speaker, Xavier Lépine, chairman of the board at asset manager La Française, noted that the role “depends on the type of investors and the type of assets that are managed”.

He suggested that pension funds, for example, have a sense of fiduciary duty and responsibility to the next generation, feeling obliged to both protect client money and to take environmental issues into account.

Private equity investors, however, expect “superior returns” from an asset class that is difficult to access, and require assistance in managing their investments.

Peter Branner, CEO of SEB Investment Management, added that the industry is seeing higher levels of accuracy and transparency. SEB has noted “demand for governance products like microfinance”, he said, with a particular push from institutional clients.

In its traditional products, it is seeing a “gradual inclusion of governance issues in our investment process”, Branner said, and this engagement is increasingly appreciated by institutional fund clients, which are starting to express more interest in governance and social behaviour, particularly in emerging markets.

Branner added that addressing social and governance issues is “interlinked” with fund performance and achieving the best return for investors.

“It’s not only about getting the last dime out of the investment, it’s actually also about getting a lot out of it long-term,” he said. “Companies that behave well tend to do better.”

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