With investors expressing frustration over the lack of quality and consistency when it comes to environmental, social, and governance information, being an effective communicator can help ESG managers stand out.
The best of these is BNP Paribas, followed by Robeco and Schroders, according to the latest ESG Report by Peregrine Communications. These managers received the highest Message Penetration Scores, ratings developed by Peregrine to assess the effectiveness of money managers’ ESG communication strategies.
Other top players included NN Investment Partners, Pictet Asset Management, abrdn, and Amundi Asset Management, according to the report. European managers dominated the list, accounting for all of the top-ten spots. Alliance Bernstein, Nuveen, and PIMCO were the only U.S.-based managers among the 25 best ESG marketers.
“There is a clear aim among many of the leading asset managers we studied to generate thought leadership that attempts to develop wider understanding about key topics,” Peregrine said in the report. For example, NN Investment Partners has been focusing on green bonds and Robeco has conducted extensive research on biodiversity. “These managers earned higher performance scores because they provided novel and actionable insight,” according to Peregrine.
Notably, Germany’s DWS Group saw its ranking drop to 18 after regulators probed greenwashing claims made by the firm’s former global head of sustainability. The manager was one of the top three communicators in 2021, which also included Amundi and Robeco.
The DWS incident has illustrated the importance of authenticity in ESG claims, according to Josh Cole, director and head of strategy at Peregrine. To avoid greenwashing, he said asset managers should pinpoint three to four key themes in their ESG strategies, such as biodiversity, deforestation, or ocean regeneration. It’s also important for each manager to deliver “consistent” messaging in order to establish authority in a given ESG category, according to Cole.
Cole noted that negative sentiments around manager ESG practices can be caught by investors during the due diligence process. “If you’ve got issues around reputation, that’s going to be a huge [risk],” he told Institutional Investor.
The report also identified the “white space” in ESG investing, referring to areas where the “supply of content is much lower than organic demand from audiences.” For example, soil erosion, pollution, and deforestation are environmental concerns that ESG fund managers can pay more attention to, according to Peregrine Microfinance, affordable housing, and gender pay-gap are some of the most overlooked social categories, while corruption, divestment, and greenwashing are governance factors that haven’t been addressed too much by asset managers.
Cole said that focusing on some of less popular ESG missions can help managers differentiate their products. “You do need to find a way to tell your story of something that’s more representative, something that hasn’t been done by everyone else,” he said.
But credibility is still the most important element in marketing ESG products. “There remain a number of areas where asset managers have an opportunity to establish brand differentiation and category authority in a rapidly crowding space,” said Max Hilton, managing director at Peregrine. “But if their efforts lack authenticity, they not only risk undermining their own reputation but also that of the entire investment industry with a negative knock-on economic impact.”