Investor engagement is suffering due to co-ordination issues at investment firms and the way ESG data is collected and processed, according to a survey by Schroders.
The UK-based investor, which manages around £725 bn ($925 bn), surveyed more than 350 investee companies across 45 countries to look for ways to improve engagement practices.
When asked to name the biggest barriers to engagement, the highest proportion of respondents – 27 percent – mention a lack of co-ordination within investor organizations.
The report quotes an IR director from a technology company in Belgium, who says good co-ordination is ‘rare’ and, at many investors, it is ‘unclear whether portfolio managers and ESG teams even speak with each other’.
The next-biggest barrier to engagement is confidentiality issues (21 percent), Schroders reports, followed by investors focusing on irrelevant or non-material topics (20 percent).
Larger companies are more likely to experience issues around non-material topics, the research notes: 27 percent cite this as an issue, compared with 17 percent of smaller-company respondents.
ESG DATA
In a separate part of the survey, Schroders asks companies an open-ended question about the biggest challenges and opportunities related to investor engagement.
In this section, 29 percent cite ESG disclosure and third-party data in their answer, with ‘many’ respondents expressing concern about how ESG data is collected and used.
‘ESG data collection and processing is becoming increasingly automated, with ESG ratings providers deploying artificial intelligence to collect data,’ notes the report.
‘There can sometimes be shortcomings, including systems not picking up company updates because the information is not machine-readable or behind a paywall.’
The research also asks companies to rank their top ‘ESG influencers’ from a list of stakeholders. Customers come top, cited by 55 percent, followed by the investment community (39 percent), government policy (38 percent) and employees (30 percent).
