Investors' engagement with investee companies on environmental, social and governance (ESG) issues is progressing but it is not as strong as it could be, according to Michael Lewis head of ESG thematic research at DWS.
Speaking at Insurance and Climate Risk conference, held by Insurance Asset Risk in partnership with sister publications Environmental Finance and InsuranceERM earlier this week, Lewis said data shows engagement success rate has increased to 30%, up from 10% in 2004.
"All asset managers will tell you the amount of meetings they've had, the number of times they voted against management etc, but not enough is done around outcome of engagement," he said. "Some managers are very advanced in measuring outcome especially within private market but I would say listed market it is immature at this stage, and they need to improve."
Also on the panel, Emily Penn, capital initiatives and investment director at LV=, said a lot of insurers were very vocal on their engagement activities but in terms of effectiveness, most of it is "probably at the early stages".
LV= outsource its investor's stewardship to its asset manager so insurers' votes can be combined with other assets under management, Penn explained. "So on engagement we get more by the power of collaboration."
Fellow panellist Prasun Mathur, head of private assets at Aviva, echoed Lewis comments on private markets saying: "We understand more about ESG on the private asset side and that helps us inform decisions on the public side as well."
"You can create structures for private credit in a more flexible and customised way," Mathur said. "There is a lot of grey areas and a binary framework doesn't work."
