Investment - Articles - Aon develops ESG rating system for fund managers

 Aon’s ESG rating system will sit alongside its existing strategy and due diligence ratings and is designed to provide an added dimension to the fund analysis. The ESG ratings are based on a variety of qualitative factors, starting with a proprietary due diligence questionnaire, which is completed by the fund manager, and followed by a review of the managers’ RI related policies and procedures, such as active ownership, proxy voting, etc.

 After a thorough review of all materials, data and policies the manager will be awarded an ESG rating using an agreed reference framework. Aon’s ESG assessment process is consistent with the UN PRI’s Investment Manager reporting framework.

 Tim Manuel, head of responsible investment for the UK at Aon, said: “The ESG landscape is both growing and evolving - and navigating it is highly subjective. As yet, there are no widely accepted global standards that define ‘materiality’ for ESG impacts. As a result, the assessment of an ESG rating is more about determining whether the manager’s process is credible, robust, consistently applied and repeatable.

 “This will change in the future as consensus emerges around which impact metrics are financially material and as ‘impact’ becomes easier to measure. However, our clients are increasingly interested in exploring or implementing responsible investing initiatives and so we feel this rating is an additional tool they can use when making investment decisions.”

 Aon’s full guide to the ratings system is available here