Knowledge. Experience. Integrity.
Asset Managers and ESG
Sensing Opportunity, Bigger Firms Lead the Charge
Environmental, social, and governance (ESG) investing is not a new phenomenon, but it has been expe-
riencing rapid growth and change in the U.S. marketplace. To better understand how asset managers are
addressing investors’ changing needs in this space, Callan queried these firms on their ESG views and
policies. Our survey reveals that the majority of large asset management firms are formalizing their efforts
around ESG implementation, via firm-wide policies, third-party affiliations, and other actions, while smaller
firms have yet to exhibit widespread adoption.
medium: $50bn – $250bn
Part of being a sound fiduciary
was another popular reason for
adopting ESG with
26% of those not adopting
ESG feel ESG factors are already
accounted for in their current
41%of all respondents have a
formal ESG policy
Has your firm signed the
Principles for Responsible
7% Not Sure
Results reflect responses from 180 asset management firms representing more than $42
trillion in assets under management (AUM). While more than half of asset management
firms (56%) do not have a formal ESG policy, and a similar percentage (53%) have not
signed on to the United Nations Principles for Responsible Investment (PRI), the firms
that have pursued these initiatives cite growing client demand as the primary motivation.
For this survey we examined managers by size groups: small (less than $50 billion),
medium ($50 - $250 billion), and large (greater than $250 billion). A greater proportion of
large firms (73%) versus small firms (23%) have a formal ESG policy at the firm level (as
opposed to on a strategy level). The same trend is true for PRI signatories: 82% of large
firms versus 20% of small firms. Further, larger firms tend to be more established in the
space: more than one-quarter (27%) of large firms created their ESG policy more than a
decade ago, compared to 21% of medium firms and 16% of small firms.
cite client demand
as their reason for
When was your
firm’s ESG policy
Within past 2 years
3–10 years ago
> 10 years ago
of firms with no ESG policy
have considered adopting one
within the last year
Note: Multiple responses allowed.
3Knowledge. Experience. Integrity.
What research process is
utilized at your firm?
Managers with an
ESG Policy by
Combination of fundamental &
Fundamental, bottom-up research*
* this includes basic screening
How is research organized
within your firm?
Multiple boutique model
Central research platform
Managers with an ESG Policy by
Multiple boutique Central Team-based59% 45% 36%
We also posed questions around research
processes and discovered that firms with
fundamental, bottom-up research are less
likely to have a formal ESG policy (33%) than
those with a quantitative approach (53%) or
that use a combination of research processes.
Research organization also mattered. Asset
management firms that implement a multiple
boutique model are more likely to have a
formal ESG policy (59%) than those with
centrally organized research (45%) or team-
based approaches (36%).
“We believe that responsible
investing is a core component of
traditional investing. Governed,
sustainable businesses have
the potential to generate strong
results over time.”
of respondents say ESG
strategies present a market
opportunity going forward
Looking forward, all sizes of asset management firms expect client interest in ESG
investing will grow. However, just 41% of the respondents see this marketplace shift as an
opportunity. Again, larger firms tend to be more optimistic about future growth, with nearly
100% sensing slight or significant increases in client interest.
Asset managers that project growth in client interest expect to see that interest coming
from the U.S. and Canada (72%) and Europe (57%). This reflects the survey respondent
population, who are primarily based in the U.S. and Europe, but may also reflect the notion
that European investors are further along in integrating ESG into investment decision
making than their North American counterparts.
Over the next 3-5 years, how do you expect
client interest in ESG to change?
Where is this increased interest likely to come from?*
Small Medium Large
* Multiple responses allowed.
Around one-third of managers
with a formal ESG policy
expect it will help them
achieve higher risk-adjusted
returns and improved risk
profiles over the long term
“We believe that environmental,
social and governance (“ESG”)
issues play an important role
in the global economy, both
from a business and investment
“Incorporating ESG factors
into the research process
is part of ensuring all risks
and opportunities that could
influence the growth potential of
the company in question have
5Knowledge. Experience. Integrity.
larger asset management
firms are taking more
actions on ESG
of respondents are
Respondents by Size
How many unique strategies does your firm manage?
We provide further detail on the demographics of respondent firms for reference. Rough-
ly half of the 180 asset management firms that responded to our survey are small (less
than $50 billion in assets), and around a quarter are either medium ($50 – $250 billion)
or large (greater than $250 billion). Respondent firms had a median of $56 billion and an
average of $232 billion in AUM. The vast majority of respondent firms actively manage
their strategies (96%). As one would expect, the smaller respondent firms manage fewer
For asset management firms, it’s clear that size matters when it comes to ESG in-
tegration. Large firms are more likely than smaller firms to have formal, firm-wide
ESG policies, be PRI signatories, and have significant expectations of growing client
interest in the space.
$50bn – $250bn
0 - 5
6 - 10
11 - 25
Small Medium Large
600 Montgomery Street
San Francisco, CA 94111