Dozens of UK’s biggest investment firms fail to meet new ESG standard

Monday, September 06, 2021 7:47 AM

Of the 189 companies with a total of £ 32bn in assets under management that have applied for the new standard, only a third have been approved.

Some of the biggest names in investing in the UK have failed to meet a new ESG standard for investing for savers and retirees, including Schroders, Morgan Stanley and Rothschild.

In a new list released today by the Financial Reporting Council (FRC), asset managers, pension schemes and insurers who have successfully complied with a revised UK management code have been revealed.

To be among the signatories to the list, these investment firms successfully explained how they create “long-term value for clients and beneficiaries, resulting in lasting benefits to the economy”.

But of the 189 companies with total assets under management of £ 32 billion that have applied for the new standard, only a third have been approved.

Three of the UK’s biggest investment giants – Schroders, Morgan Stanley Investment Management and Rothschild Wealth Management – have failed.

Of those who had not been put on the new list, most were demoted from having been signatories before – which simply required them to draft a policy statement on their management that met the criteria.

But for the first time this year, investment firms had to provide detailed evidence of their activities’ compliance with the new FRC code, comprising 12 principles.

This included showing how they exercise their rights over listed stock market assets and demonstrating how they “systematically integrate stewardship and investment, including important environmental, social and governance issues, and climate change, to fulfill their responsibilities ”.

For those who were not on the list, the FRC “will encourage those who have failed to reflect on our comments and apply again in the future,” said Managing Director Sir Jon Thompson.

Investment houses selling ESG funds and managing other assets are likely to face pressure to explain to clients why they are not on the list.

About 125, or two-thirds, successful candidates made it to the list, including Abrdn, JO Hambro Capital Management, Fidelity International and Legal & General Investment Management.

Kristan F. Talley