Many firms are planning to increase the number of ESG criteria they use in the manager due diligence process. For instance, 50% of advisors say a fund manager’s formal ESG/SRI policy is already part of their firm’s due diligence process or will be in the next one to two years. Responses are similar for other factors, including whether a manager has a dedicated ESG/SRI team in place or whether ESG/ SRI has been incorporated into portfolio and performance reviews. In fact, only about a third of firms do not plan to consider these kinds of criteria in their due diligence.
Advisors are much less likely to evaluate a manager’s focus on diversity and inclusion, with just over a quarter (29%) considering this factor when selecting a strategy. In fact, nearly half (48%) of advisors say there’s no value in asset managers weighing in publicly on diversity, equality, inclusion and community issues at all, while just 11% say this behavior has high value. The difference between the due diligence levels on these two themes may reflect the fact that ESG/SRI has been around a lot longer as a strategy than has diversity and inclusion. Advisors also say diversity and inclusion is
slightly less important to younger clients than ESG.