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27 April 2016

Are investment
managers walking the talk on responsible investment?

LCP’s survey of over 100 investment management firms revealed that investment managers are increasingly signing up to the United Nations backed Principles for Responsible Investment (PRI).

However, even among PRI signatories, there is a huge difference between the responsible investment credentials of the best and worst scoring managers in LCP's survey. Experts at LCP say this shows the importance of looking beneath managers’ headline commitments to responsible investment.

Mark Nicoll, a partner at LCP, said: “The diversity of scores in our survey tells an interesting story. It is encouraging that for the managers who were rated as strong or fairly strong, 100 per cent were signed up to the PRI.

However, just because a manager signs up to the PRI doesn’t necessarily mean they take responsible investment seriously. In fact we rated over half of PRI signatories as weak or fairly weak. There remains room for the rhetoric to catch up with reality.”

The survey results - revealed today (27 April) - form part of LCP’s latest magazine “Investing Responsibly” which looks at why all investors should look to make responsible investment a focus.

According to LCP, while responsible investment research should not be limited to scores within a single survey, what the research underlines is why trustees need to examine managers’ responsible investment credentials rather than taking them at face value.

Nicoll adds: “It takes relatively little effort for an investment manager to give the appearance that they are concerned about responsible investment issues. This can easily be done by producing glossy marketing material, by joining relevant industry groups or – indeed – by signing up to the Principles for Responsible Investment.

“It’s therefore encouraging to see that that many – though far from all – of those managers displaying a commitment to responsible investment are backing this up by integrating these considerations into their investment processes."

The survey covered key issues including:

  • underlying levels of commitment and resources;
  • voting procedures;
  • engagement on topical environmental, social and governance issues and;
  • collaboration with other investors.

Download a copy of LCP Investing Responsibly here

LCP Responsible Investment Scores

Responsible investment score

All managers (%)

Of PRI* signatories (%)

Of non-PRI* signatories (%)

1 (weak)

15 3 41

2 (fairly weak)

52 48 59

3 (fairly strong)

24 35 0

4 (strong)

9 14 0

*Principles for Responsible Investment signatory

For further details of the survey results click here to access