UK-based consultancy LCP has said investment managers are falling short in their efforts to engage with companies, policymakers and regulators. In its seventh responsible investment survey of asset managers, LCP highlighted that effective engagement is crucial to tackle systemic risks like climate change. Managers need more structure in their engagement process with companies, LCP suggested, having found that only 48% set clear engagement objectives, while half tracked progress or recorded outcomes. Without proper monitoring, investment managers may struggle to determine when escalation is needed, the report noted. Around 65% of managers had escalation policies in place – of which 60% included timelines and triggers for escalation. “Engaging with companies, policymakers, and regulators is essential for addressing climate change, nature loss and inequality,” said Sapna Patel, Principal at LCP and lead author. “However, this requires proper accountability. Setting clear objectives and milestones is a critical first step, yet it’s something that many managers overlook.” The survey also showed that most managers focused on promoting change in individual companies, while only 19% sought change across the whole market. “This may explain why engagement with policymakers and regulators is often sporadic, with just 16% engaging frequently, and 30% occasionally, on market/industry-wide topics and systemic risks,” LCP noted. In addition, less than 6% of managers frequently engaged on sustainable finance and economic policies focused on real-world impact as part of their policy advocacy. “Focusing on individual companies and engaging with them is important, but the investment industry must take a broader approach to tackle market-wide challenges,” said Claire Jones, Partner and Head of Responsible Investment at LCP. “We need faster action on net zero plans and real-world implementation, and we urge investors to engage more with policymakers and regulators on these issues.”
