Investment consulting firm Aon has developed an environmental, social and governance (ESG) rating system to assess how well asset managers integrate ESG considerations into their investment decision-making process.
The ESG rating system will work alongside Aon’s existing strategy and due diligence ratings. The ESG ratings are based on a mix of a due diligence questionnaire to assess qualitative factors and a review of responsible investment policies and procedures. Managers are then awarded an ESG rating. Aon said its framework is consistent with the UN PRI Investment Manager reporting framework.
Aon head of responsible investment for the UK, Tim Manuel, commented: “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.”