Investment consultancy Aon has unveiled a new rating system which grades how well investment managers are integrating sustainable approaches in their investment decision making process.
In an announcement, the company said its new ESG rating system would sit alongside its existing strategy and due diligence ratings, which it believes will offer investors an “added dimension” to fund analysis.
Tim Manuel, head of responsible investment for the UK at Aon, said, it was becoming more difficult to navigate the “ESG landscape” because it was growing and evolving which means that navigating it can be “highly subjective.”
He explained: “As yet, there are no widely accepted global standards that define ‘materiality’ for ESG impacts. As a result, the assessment of an ESG rating is more about determining whether the manager’s process is credible, robust, consistently applied and repeatable.
“This will change in the future as consensus emerges around which impact metrics are financially material and as ‘impact’ becomes easier to measure. However, our clients are increasingly interested in exploring or implementing responsible investing initiatives and so we feel this rating is an additional tool they can use when making investment decisions.”
Aon’s ESG ratings use qualitative factors such as an in-house due diligence questionnaire which is completed by fund managers, followed by a review of managers’ responsible investment policies and procedures, in areas such as proxy voting and active ownership.
The consultancy says its ESG assessment process is consistent with the UN PRI’s Investment Manager reporting framework.
