Your MoneyStocktake

Do fund managers care about ESG? Perhaps not

Study finds that the more of his own money a fund manager has invested in a fund, the lower the ESG performance of that fund

A study suggests that environmental concerns are a low priority for most fund managers. Photograph: Christof Stache/AFP via Getty Images
A study suggests that environmental concerns are a low priority for most fund managers. Photograph: Christof Stache/AFP via Getty Images
Proinsias O'Mahony
Tue Mar 28 2023 - 05:15

ESG (environmental, social and governance) investing is big business, but do fund managers believe in the product they are selling? Or are they just trying to attract client assets?

A recent study suggests the latter is more likely. Looking at the performance of more than 22,000 US fund portfolios, the researchers compared the ESG performance of funds where the manager had their own money invested with funds where they were not invested.

[ Ireland's top firms focusing more on ESG issues ]

Commenting on the study, Liberum strategist and blogger Joachim Klement notes the results are “straightforward and unfortunately not good”. The more money a fund manager has invested in a fund, the lower the ESG performance of the fund. It suggests many fund managers don’t care about ESG – they are just trying to cater to clients or to attract new ones.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column