Current issues in the field of economics, (responsible) investing, pension and income: every week an expert from APG gives a clear answer to the question of the week. This time: Head of Responsible Investment Capital Markets & RI Communications Anna Pot on whether the increasing size and power of large asset managers is having a negative effect on sustainability.
"The shareholder landscape is changing slowly, but the changes are revolutionary," wrote Volkskrant columnist Peter de Waard a month ago. "Shares are ending up in the hands of a smaller and smaller group of investors who are further away from the companies in which they put their money." In the past, shares were mainly owned by wealthy families, who voted annually at the shareholders' meeting, writes De Waard. From the 1970s onwards, new types of major shareholder emerged, such as banks, insurers and later also pension funds. Nowadays these parties partly outsource their investments to large asset managers such as BlackRock, State Street and Vanguard, companies that focus on index investing, he says. As a result, they do not select shares themselves but instead follow a stock market index, and are therefore less involved as a shareholder. Doesn't this form of passive investing come at the expense of sustainability?
According to Pot, this doesn't necessarily have to be the case. "These large parties are increasingly starting to invest sustainably. They are also investing more and more in establishing their own teams to focus specifically on the responsible investing criteria of their investments. When making investments for their clients, such as pension funds, they increasingly take sustainability considerations into account. There is a positive trend with large asset managers helping to ensure that an increasingly large pool of assets worldwide is being invested sustainably."
APG recently launched the iSTOXX APG World Responsible Investment Index, which is managed by BlackRock. “This index product is not actively managed in terms of risk and return, which keeps costs low. However, it is actively managed in terms of sustainability by adding different filters, depending on the client's wishes. These filters can be the exclusion of certain products, investing only in ESG leaders, reducing the carbon footprint, and including Sustainable Development Investments. The market should therefore not classify this type of investment as a traditional index product. Products like these actually form a whole new category. You could call them 'responsible index products'."