2022: The Playing Field

SquareWell’s latest study – The Playing Field – was featured on Harvard Law School’s Forum on Corporate Governance. Each year, SquareWell publishes a study reviewing how 50 of the world’s largest asset managers (“Top 50”) are factoring governance and sustainability considerations within their investment decision-making processes and their approach to stewarding portfolio companies. This year’s study demonstrates that investors may have reached the saturation point of visible governance and sustainability integration, giving the foundation for practical considerations on these topics for stewardship activities, and progress on how investors think about integration.

Global asset managers have sought out many ways of establishing themselves as responsible investors, becoming signatories to the United Nations Principles of Responsible Investing (“UN PRI”, as well as other initiatives), and establishing the internal structures needed to manage the requirements of being modern stewards of capital. Asset managers have also adapted their offerings to include products such as thematic investments. These investments, offering clients focus on specific sustainability issues, have been adopted by 48 of the 50 top asset managers surveyed. Notably, we see that certain aspects of investors’ approaches to responsible investment, such as developing internal capability and offering innovative products, have become an expectation of large asset managers, rather than a differentiator.

With these new expectations in mind, asset managers are now seeking opportunities for differentiation through other means. Our study of the Top 50 Asset Managers, has shown that three areas of differentiation have emerged: (1) How to Leverage External Inputs; (2) Whether to Vocalize Discontent and Support; and (3) How to Communicate their Agenda.

The full article can be accessed here.