Caldecott & Rook: Investment consultants and green investment – Risking stranded advice?

Executive summary:

Investment consultants (ICs) play a key role as advisers to asset owners (AOs). They provide strategic advice to AO boards about asset allocation and develop plans for how AOs can achieve the performance they need to match liabilities. The advice from ICs is also used to construct mandates for asset managers and they often assess asset manager strategies and/or help AOs select asset managers for mandates. Examining these and other roles played by ICs makes it evident that they occupy a key position as ‘gatekeepers’ for many AOs, and that they operate at the interface between different parts of the investment ecosystem. As such, they are instrumental in determining whether innovative ideas are accepted or not by the financial community. This role as gatekeeper applies to products and services related to green investment1. Yet extensive formal and informal dialogue with diverse stakeholders suggests that: how ICs are engaging with their AO clients may not be accelerating innovation in and uptake of green investment practices. Instead, and in general, they seem to be hindering them. As a consequence of these observations from stakeholders, we inaugurated a project to investigate and understand what is happening and why.

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