Sustainable investing (SI) is dynamic and has evolved significantly over recent years, including what is considered good practice, due to developments in regulation and changes to investor attitudes. However, this varies across asset classes. So, the key question to many investors; what does good environmental, social and governance (‘ESG’) integration look like across asset classes?

Isio have been assessing and rating asset managers and products for several years. The results in this paper present a snapshot of the outcome and findings of their Sustainability Integration Assessments, where they have assessed a selection of c. 50 asset managers across over 120 funds.

Isio have developed in-depth, asset class-specific scorecards, breaking down key areas of focus, resulting in an overall ESG score as well as scores across individual categories. This enables them to analyse where asset managers and funds sit relative to peers within their respective asset classes as well as against what they consider good practice. In the survey, Isio look at firm-level ESG practices and then turn to fund level aspects, splitting results across each of their five SI assessment pillars: investment approach, risk management, stewardship, reporting and collaboration.

Some highlights from the survey include:

• c. 75% of asset managers assessed have set firm-level net-zero commitments, but not all commitments are supported by interim decarbonisation targets and do not cover all assets under management.
• c. 50% of funds assessed have fund-level ESG objectives in place, however there remains a bias towards climate-related objectives.
• c.36% of funds assessed are able to provide TCFD-aligned climate reporting (also capturing scope 3 emissions); this is clearly a growing area of focus across the market but still requires further development. Isio continue to see a lag in social and nature-related reporting across all asset classes.

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