Jump to content
  • Jonathan Max
    Jonathan Max

    Sign in to follow this  

    ESG: Going full circle, why Asset Managers need to look at HR to drive culture

      Time to read: 3min

    Interest in Environmental, Social and Governance (ESG) investment is on the increase but the breadth of impact can be hard to grasp. According to a recent Forbes article, “ESG factors cover a wide spectrum of issues that traditionally are not part of financial analysis, yet may have financial relevance”.


    This growing sector now accounts for $52bn of AUM and much of the demand is being driven by millennials of which 90% expressed a desire to direct their allocations of responsible investment in the next five years. The influence this population will have is staggering, as highlighted in the excellent Deloitte Global Millennial Survey 2019. 

    Let us explore further the reports’ conclusion around ‘the roadmap for business’; specifically, the people and HR implications for an ESG aware and engaged population.

    Implications for Talent

    In order to attract and retain top talent, companies will need their ESG focus to meet the expectations of millennials who want to work for companies which share their own ideas of ethical business and sustainability. In short, they need to provide the right company culture for this emerging generation. 

    And what exactly are Asset Managers doing to attract, motivate and retain talent through culture?

    The answer is not very much according to Roger Urwin, global head of investment content at the Thinking Ahead Institute, “Only a small proportion of asset managers have measured and actively manage their own culture”. He goes further by pinpointing in citing Diversity and Inclusion being “a cornerstone of the asset manager culture in the future.”


    From this we can conclude:

    1. Millennials are drawn to purpose-driven organisations, rather than out-and-out for-profit corporations. Employers need to reappraise their purpose beyond the sole pursuit of profit if they are to attract the best talent
    2. The focus on equality, diversity and inclusivity issues across  the company (not just the board) will be required
    3. Without these commitments retention of the best talent will be challenging  

    Power to the People

    “Investors can play a critical role in helping companies address workforce-related issues by

    seeking information on companies’ employment models and working practices”
    (Investment Association 2018)

    The CIPD Intangible Workforce – Investor Perspectives on Workforce Data report states the human capital information is fundamental in the investment decision process. This includes, management quality, governance, executive pay, labour related costs and employee attraction and retention.

    The stark reality is that without this focus on people-related ESG priorities, the long-term prognosis looks less appealing for in the industry. Asset Managers will therefore increasingly need to set the yardstick by how others are expected (or need) to operate. 

    The Culture issue

    The people-related issues very much align to why “Culture is often cited as a key issue in organisations that shapes the ability of the business to create value” and “investors in the environmental, social and governance sphere who look for information regarding the organisations’ approach to boardroom diversity, wider workforce diversity and gender-related information”.

    Millennials and ESG priorities are intrinsically linked, the needs associated with both must be aligned to maximise the long benefits. The more an Asset Manager becomes recognised as a leader in ESG; the greater the opportunity it will have to maximise the increasing demand. These companies which are switched on to ESG will be led by individuals with ambitions in creating a culture which drives the very behaviours underpinning the essence of ESG. 

    • Like 2

    Sign in to follow this  

    • Share this    
    Share this  

    Member Feedback

    Recommended Comments

    Be the first to comment.

    Become a member to read more and join the discussion

    Members can read and contribute to discussions


    Register now for free access.

    Create your account

    Sign in

    Already a member? Sign in here.

    Sign In Now

  • Related Content

    • Jonathan Max
      By Jonathan Max
      Earlier this year the Chartered Institute of Personnel Development (CIPD) the professional body for HR and people development in collaboration with Uptimize, a firm which helps organisations attract and leverage neuro diverse talent, produced an excellent guide on Neurodiversity at Work. Simply described the recognition and respecting of different ways of thinking due to autism, dyslexia, ADHD, etc. and consider these various neurological conditions as result of normal variations in the human genome.

      This blog explores the key learnings and how they may be applied to the Financial Services industry. More specifically, we want to look towards Investment Management, and helping raise awareness of the importance and benefits of neurodiversity in the workplace.

      Key points from Neurodiversity at Work
      The business case for diversity in general is now accepted. Organisations now challenge each other with innovation and vie for competitive advantage. As a consequence, there are significant risks of being left behind and one of these is not including people with different ways of thinking or actively leveraging different thinking styles. The Neurodiversity at Work guide points to a clear comparison between man and machine. Unlike a machine, the human brain cannot be determined as ‘fixed’ or ‘broken’; it might just have a different way of operating. 

      The guide focuses on forms of ‘innate neurodivergence’ such as Autism and ADHD; effectively a further pillar of Diversity and Inclusion that seeks to embrace the talents of people who think differently. Neurodiversity is not something binary but rather a range of differences in brain function and behaviours. We need to move away from stereotypical thinking of neurological conditions. The “negative and medicalised language has dominated the lexicon – witness the very terms ‘autism spectrum disorder’ and the double negative in ‘ADHD’. The size of this talent pool should not be underestimated, as the guide reports the overall population of neurominorities is greater than 10%.

      Neurodiversity in action
      According to the report, lessons can be learned from the JPMorgan, EY, Google, Microsoft, SAP, Ford and Amazon who all have, or are developing, neurodiversity initiatives with some more advanced than others.

      JP Morgan
      “Around 80% to 90% of autistic people are unemployed,” says James Mahoney, executive director and head of autism at work at J.P. Morgan. “For us, that’s a talent pool. If you look at areas like technology – there’s a huge shortage of good people with high-level skills. It’s a sector that we know many autistic people excel in.”

      In 2016 EY launched a neurodiversity program in Philadelphia to hire people on the autism spectrum to serve as Account Support Associates (ASAs). Sam Briefer, one of the first hires under the neurodiversity program said: “We bring something to the table that a lot of people cannot. We are very detail-oriented. We analyse things in a very specific way, and we are good with numbers. And we see things slightly differently, which means we can come up with new and innovative ways of doing things.”

      Enterprise software firm SAP has committed 1% of its workforce made up of those on the Autistic spectrum by 2020 – reflecting the percentage of the global population that is Autistic. It’s Autism at Work programme launched in 2013, and the company has transformed the way it recruits and trains staff to be as inclusive as possible. “We had to develop so many processes from scratch because we didn’t want to use standard HR processes,” says Stefanie Nennstiel, senior director of diversity and inclusion at SAP. “Someone with autism would not survive the traditional interview process, for example, so we had to be more creative.” 
      Action for Investment Management industry to take
      So, what can the Investment Management industry do to harness this talent and be neurodiversity smart? 

      Clearly there needs to be commitment to neurodiversity from the top of the organisation which then must cascade and be communicated so that this vital group can be integrated into the culture of the firm. Review of workplaces, hiring process and management practices is essential; given the fundamental changes the industry has faced over the last few years, I would hope this would be seen as a further change worth making.
      The cost of inaction for Investment Management might be vast, and if you’re pondering when your organisation might adopt a neurodiversity policy, just ask yourself these two questions:
      - What will it cost you not to get the most out of your employees in terms of productivity, or to lose talent to more inclusive, attractive employers? 
      - What will it mean for your product innovation to miss out on the ‘diversity of thought’ that neurodiversity can deliver, and that other firms are setting themselves up to benefit from?

      And then you might want to speak to your senior management team or HR, or both.
      This article was originally published on the AlgoMe blog in November 2018
    • Tarne Bevan
      By Tarne Bevan
      ESG Data Integration: Important considerations for Investment and Wealth firms
      Tarne Bevan & Adam Taylor
      The Investment Management industry is now promoting ESG data as a meaningful input to generating financial returns for our investors and, by default, asking them to also rely on that data in our reporting and disclosures to them.
      Yet, many consumers of data within an investment firm are unaware of the importance a good data governance framework provides in delivering reliable, accurate and fit-for-purpose inputs across investment and operational processes.
      This aim of this paper is not to critique or analyse the validity of ESG datasets or independent data vendors, but rather offer some insights into associated risks and practical considerations for those less versed in adopting ESG data and good data governance.
    • Andy Milner
      By Andy Milner
      An interesting chart from the IPE's top 400 report showing the assets "invested on ESG principles".
      According to their reporting, LGIM (and NN Investment Partners) run 100% of their investments this way, and so came out a country mile ahead of the rest of the industry. It would be interesting to know how they define / explain this - any insights appreciated!

      Chart of the Week: Which asset managers have the most ESG analysts? | News | IPE
      WWW.IPE.COM IPE’s Top 400 Asset Managers survey asked investment companies about their dedicated ESG and corporate governance specialists for the first time  
    • Luuk Jacobs
      By Luuk Jacobs
      The use of ESG data in the Investment Management industry has come a long way. It is now one of the main components in many investment decisions as well as for the engagement with the companies invested in through its investment portfolios.
      High profile discussions, debate and activism around the impact of global warming on our environment has brought the importance and power of ESG investing even more to the forefront. With this comes an extraordinary paradigm shift in which the driver behind environmental change is not government but the investor (with the investment industry representing the investor).
      A fast growing sector
      The industry is ramping up its promotion of ESG data as a meaningful input to generating financial returns for our investors and, by default, asking the investor to also rely on that data in the reporting and disclosures to them. Yet, many consumers of data (including investment decision makers) within the investment management industry are unaware of the importance a good data governance framework provides in delivering reliable, accurate and fit-for-purpose inputs across investment and operational processes.
      This awareness gap is exacerbated for ESG data because it is less evolved than, say, capital market data sources (i.e. accounting data, securities attributes, pricing, volatility measures, etc.) and is generally more subjective or proprietary in form.
      The rate of adoption of ESG data across the industry without due consideration for its nature, how and when it is derived, what methodologies might be used to produce it, and how it will be used within a firms’ investment process and disclosures, has the potential to create unintended risks for investment firms.
      It should therefore be afforded the same level of governance rigour given to other major inputs to the investment process and accompanying services. Specifically, any firm producing its own proprietary ESG scores and frameworks needs to exhibit appropriate transparency and oversight to avoid the reality or perception of gaming scores for strategies with higher fees.
      A new framework
      The recently published paper ESG Data Integration: Important considerations for Investment and Wealth firms creates some insight in not only the associated risk of the use of ESG data but equally some guidance as to how an ESG data governance framework can be set up.
      We can only hope that such a governance framework gets the equal attention as the good that is aimed to be achieved with the use of ESG data in investment decision and the engagement with companies invested in. If good ESG data governance is not achieved then all the good intention to change the world for the better might end up with very disillusioned investors.
Debug info:
You may be asked to provide the below information to an AlgoMe administrator if you are facing any problems with the app:
topics/forum ID93
page ID
PHP user agentCCBot/2.0 (https://commoncrawl.org/faq/)
ThemeAlgoMe v2.2
Mobile appNO
Member ID

We use cookies to give you the best possible experience. If you continue, we’ll assume you are happy with this. For further information, see our Privacy Policy.