Half of the top asset managers have their own ESG ratings

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– The largest asset managers are developing their own ESG rating systems.
– This should lead to less reliance on third-party rating systems.

Here’s the intro from this “IR Magazine” article:

The world’s biggest asset managers are ‘increasingly looking to develop their own proprietary ESG ratings and tools to lessen their dependence on ratings firms’, according to new research from SquareWell Partners. The firm’s annual study of the 50 largest asset managers globally – which this year have close to $60 tn in assets under management – looks at how these managers are approaching some of the biggest issues facing the financial markets. This year, the report looks at how asset managers approach ESG, corporate engagement and voting at general meetings.

SquareWell finds that 20 of these 50 asset managers use data from at least four different ESG ratings agencies, such as MSCI and Sustainalytics. At the same time, 30 have now developed their own, proprietary internal ratings system – findings that no doubt add to the pressure on companies to not only report on ever-increasing ESG metrics but also to fill out ratings agency questionnaires.

And here’s another excerpt:

SquareWell’s report also looks at the different reporting frameworks supported by the big asset managers: 43 of the 50 support the TCFD framework and 27 support SASB’s reporting standards. Additionally, 36 are members of Climate Action 100+ while only nine are part of the Net Zero Asset Managers Initiative. ‘While the GRI has remained prevalent for multi-stakeholder sustainability reporting, investors have intensified the pressure on companies to adopt more targeted and material reporting frameworks such as those of the TCFD and SASB,’ Mudan says.

Meanwhile, here’s a ranking of how asset managers are faring with ESG based on a scorecard system from ShareAction. As you will see, some funds might not be walking their talk….