According to Virginia-based CFA Institute, a non-profit that advocates for the highest possible ethics standards in the investment advisory profession, its membership’s view of corporate social responsibility is still evolving. Worldwide, the portfolio managers and research analysts who participated in this year’s survey are taking environmental, social and governance (ESG) concerns more seriously compared to a similar survey the organization conducted in 2015.
Overall, almost three-quarters of the almost 1,600 survey respondents say they take CSR-related issues into account when making investment decisions. And among those who don't, two-thirds said they would if there were more client demand.
But the CFA Institute noticed a Mars-Venus divide between how men and women in this profession view the value of CSR. Almost half, or 46 percent of the men surveyed, believed these issues were immaterial and offered any added value to their investment decisions, compared to only 18 percent of the women who participated in the study. And twice as many men as women were unsure if the consideration of CSR issues were consistent with their fiduciary duties.
A larger issue that faces the industry, however, is the lack of demand for such information from investors in the first place. Almost half of both men and women surveyed reported that clients are simply not bringing up these questions. That revelation comes despite a watershed year in the investment community as more shareholders have voted to push companies to take more action on issues including disclosures related to climate change risks – ExxonMobil, of course, being the most headline-generating example.
Meanwhile, more investment management companies, such as Vanguard, are nudging the companies in which they own shares to ramp up their disclosures on how climate change could potentially have an impact on their long-term business performance.
Awareness, however, explains a large part of the inertia that is still ongoing within the wider investment management sector. Access to CSR education and training overall is still rare. The CFA Institute survey showed that only about one-third of respondents said their companies’ employees received any kind of CSR training. The upside, however, is that 75 percent of respondents said they are open to having employees at their companies receive education on CSR issues.
While 61 percent of the survey’s participants agreed that companies should be more straightforward in reporting on various sustainability-related indicators, corporate governance still reigns supreme as this industry’s most pressing concern. Board accountability, said 77 percent of those surveyed, was still the most prominent issue affecting financial markets. The next largest concern was human capital, at 65 percent. But environmental issues are still on the radar of many within this segment of the financial industry, as 62 percent affirmed that environmental degradation is an ongoing issue.
Image credit: Anthony Quintano/Flickr
Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.