A study from boutique growth strategy consultancy Chestnut Advisory Group found that asset managers are taking the lead in defining ESG, guidance investors are following. In the study, 63% of institutional investors said they were “just getting started” with ESG while just 13% of asset managers said the same, leading to the conclusion that the latter is taking instruction from the former.  

Asset owners are usually behind asset managers regarding ESG practices. According to Chestnut Advisory Group CEO Amanda Tepper, this is mostly owing to asset managers having rules, mandates, and regulations that they must follow, a level of scrutiny institutional investors lack. Tepper: “The asset managers are complying with these mandates in real time. There’s no mandate or rule for what institutional investors have to do. There are a lot of rules coming out for what asset managers have to do.”  

When institutions have questions about ESG, they usually look to asset managers to answer them. Tepper says that because of this, asset managers should look to specialise in ESG: “Over time we expect [that] managers who are viewed as among the smartest on ESG issues will gain an edge over their competitors with investors who value their ESG expertise.”  

Source: https://www.institutionalinvestor.com/article/b1x6mx8n4k4y60/Investors-Are-Letting-Asset-Managers-Define-ESG-and-the-Industry-Is-Happy-to-Oblige