Schroders to include ESG data in value assessments – Citywire Financial Publishers

Schroders to include ESG data in value assessments Citywire Financial PublishersSchroders to include ESG data in value assessments Citywire Financial PublishersRead More

Schroders will include sustainability data at an individual fund level in its next value assessment as the asset manager said it wants to ‘differentiate’ itself from peers.

Since October 2019, the Financial Conduct Authority is asking asset managers to rate their funds on seven points, including quality of service, investment performance and comparable services, within four months of their full-year results. Schroders will now also add the ESG metric, which is not dictated by the regulator.

James Rainbow, head of Schroders UK business, said: ‘We see this as an opportunity for Schroders as an active manager to differentiate ourselves by enhancing transparency around sustainability and demonstrate additional value to our clients.’

The integration of sustainability data will be facilitated by ImpactIQ, Schroders’ measurement tool and the information reflected will be included in their fundsheets for 2022.

In its second value assessment, published in April, Schroders found that nine of its 89 funds were ‘not demonstrating value’ to investors, the same number of mandates as last year. As a result, it handed control of its underperforming UK Equity and UK Opportunities funds to Citywire AA-rated pair Bill Casey and Nick Kissack and placed four of its multimanager funds under review.

In July, the FCA published a damning review of asset managers’ value reports, saying that firms had failed to properly assess whether their funds offer value to investors, had excluded their highest-charging fund share classes from cost comparisons, and cannot justify their fees, the City watchdog has said.

It also said that in some cases asset firms referenced ESG services that had been integrated across a wide range of funds, but couldn’t explain why this justified higher fees.

Andy Howard, Schroders’ global head of sustainable investing, said the firm wants to ‘actively influence corporate behaviours’ so that investee companies are managed in a more sustainable way.