Only eight asset managers have earned the level of ‘Leader’ in Morningstar’s latest ESG Commitment Level Landscape assessment, while a number of the largest asset managers remain ‘Basic’ or ‘Low’ in their ESG credentials.

Affirmative Investment Management, Australian Ethical, Boston Trust Walden, Domini, Impax, Parnassus, Robeco and Stewart Investors were awarded Morningstar’s highest distinction of Leader, while 21 scored Advanced. The largest group of firms (48) received an ESG commitment level of Basic, while 31 earned Low.

According to the assessment, ESG issues such as climate change have become more prominent over the last few years. As a result, investors increasingly expect asset managers to minimise these risks to their portfolios and address the impact of their investments on society and the planet.

The Morningstar ESG Commitment Level is designed to provide a qualitative assessment of global asset managers that aims to help investors identify the asset managers dedicated to delivering sustainability outcomes.

Compared with previous years, ratings changes have increased, although they remain few and far between. Two firms, Wellington Management and Brown Advisory, were upgraded to Advanced from Basic. Franklin Templeton and BetaShares were also upgraded, to Basic from Low. Meanwhile, UBS Asset Management was downgraded to Basic from Advanced.

“With only five firms changing ratings out of the 50 firms reviewed this year, it is fair to say that our assessment of asset managers’ commitment to sustainability does not change much over time. This is because of our thorough and prudent analysis of the firms’ sustainable investing philosophy, ESG capabilities and stewardship activities,” said Hortense Bioy, director of sustainability research at Morningstar.

“The ESG backlash in the US and accusations of greenwashing have led some asset managers to backtrack on their ESG commitments. These tend to be managers with Low or Basic ratings, so it did not come much as a surprise. Managers with Advanced or Leader ratings have demonstrated consistent commitment to sustainability.”

This year, 34 firms were reviewed for the second or third time. Of those, four maintained ESG commitment levels of Leader: Robeco, Impax Asset Management, Parnassus, and Boston Trust Walden.

Additionally, BlackRock, Capital Group, JPMorgan, and Invesco retained Morningstar ESG commitment levels of Basic, while Vanguard remained at Low.