Asset Owner Expectations

We have spoken in previous GoodWolf articles about what ‘net zero’ is and why it matters, as well as the role of finance in the biodiversity crisis.

But who is the ‘finance’ we speak of?

It’s easy to think of this as the institutions – banks, fund managers, investment advisors and asset managers – but all these organisations work on behalf of asset owners.

These asset owners range from individuals with investments and superannuation to high-net-worth individuals, the endowments of foundations and trusts as well as the superannuation funds. In other words, any person or organisation who makes investments or has superannuation.

Responsible Investment, therefore, begins with asset owners – their expectations serve to direct the actions of financial institutions and the companies/governments they invest in. The UN Principles for Responsible Investment provides guidance for asset owners and the UN Environment’s Finance Initiative convenes the Net Zero Asset Owners Alliance.

However, at COP26, while much of the finance focus centred around investors and asset managers, an alliance of asset owners drew attention to the critical role they can play in driving change. A group of UK Trusts, Foundations and University Endowments and Religious groups developed and signed the declaration: “Asset owner climate expectations of asset management”, setting out the minimum standards they expect from asset managers in relation to allocation, active ownership and transparency. One of the participants, Friends Provident Foundation led the innovative 2020 initiative, the ESG Olympics.

As we are all asset owners in some form, we too can play a role in the change by making our expectations clear to our own financial advisors, institutions and superannuation funds.