Work Streams

Asset Management Working Group

The Asset Management Working Group (AMWG) is a global platform of asset managers that collaborate to understand the various ways ESG factors affect investment value and the evolving techniques for the inclusion of ESG criteria and metrics. The AMWG, representing approximately USD 3 trillion in assets under management, aims to mainstream the integration of ESG factors into investment analysis, decision-making and ownership practices.

Background

Leading to 2003, there was a growing body of evidence from the academic and specialist financial communities on the materiality of ESG issues to the fair value of investments. To make this linkage ‘real’, the AMWG requested mainstream research institutions to conduct studies on the materiality of ESG issues to the valuation of securities. This resulted in the landmark report, The Materiality of Social, Environmental and Corporate Governance Issues to Equity Pricing, published in 2004. The robust conclusions of the 'Materiality 1' project prompted UNEP FI to organise a meeting of Europe’s largest pension funds to discuss appropriate responses by institutional asset owners. Following this meeting, the initiative to develop ‘Principles for Responsible Investment’ was announced.

Although the ‘Materiality 1’ project uncovered the strong business case for ESG-inclusive investments, many investors continued to assert that they are legally prevented by fiduciary or equivalent duties from factoring ESG issues in their decision-making. Thus, the AMWG commissioned Freshfields Bruckhaus Deringer, a leading international law firm, for a legal opinion on where the legal responsibility for ESG issues lies in the investment chain. The report, A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment (‘the Freshfields report’), launched at the 2005 UNEP FI Global Roundtable at the UN headquarters in New York, provided assurance to institutional investors that the consideration of ESG factors is firmly grounded within the bounds of fiduciary duty. In the same year, twenty of the world’s largest investors convened by then UN Secretary-General Kofi Annan developed the Principles for Responsible Investment (PRI). The process was implemented by UNEP FI and the UN Global Compact. In 2006, the PRI was launched at the New York Stock Exchange by Secretary-General Annan.

To support the PRI, the AMWG launched another call to sell-side researchers to produce ESG-inclusive research. The report, Show Me the Money: Linking Environmental, Social and Governance Issues to Company Value ('Materiality 2'), broadened the work on financial materiality, encompassing more sectors and methods. It was produced in 2006 by the AMWG together with global investment consultants, CRA RogersCasey. Other supporting AMWG projects include the report, Generation Lost: Young Financial Analysts and Environmental, Social and Governance Issues (done in partnership with the World Business Council for Sustainable Development), a project that performed a 'reality check' on whether ESG concepts were really penetrating at the grassroots level of the financial sector.

The PRI was endorsed in 2007 by UN Secretary-General Ban Ki-moon. To date, over 500 institutional investors from the around the world have committed to implement the Principles for Responsible Investment.

Members

Co-Chairs

• Gianluca Manca, Head of SRI, Global Head of Non-Profit Business, Eurizon Capital (Intesa Sanpaolo Group)
• Julie Fox Gorte, Senior Vice President for Sustainable Investing, Pax World Management Corp.

Current Projects

• Fiduciary responsibility - Theoretical, practical and legal aspects of integrating environmental, social and governance (ESG) issues into institutional investment
• The capital markets and the valuation of ESG factors
• The materiality of climate change to investment
• Carbon calculator for investment portfolios

Contact

Butch Bacani
Programme Officer, Insurance & Investment
investment [at] unepfi.org