Firms with thoughtful, well-articulated ESG policies are more likely to anticipate shifts in consumer preferences, regulatory expectations, and reputational pressures.
Tony Adams, Head of Sustainable Investment Research at Lonsec Research and Ratings, explores the evolving ESG practices of fund managers, with a particular focus on firm-level assessments. Adams reflects on developments observed between 2023 and 2025, noting both progress and emerging challenges in how asset managers approach Environmental, Social and Governance (ESG) integration.
The commentary outlines improvements in internal ESG scores across firms, driven by stronger policy frameworks, clearer reporting, and enhanced stewardship practices. Increased transparency, including more frequent and detailed disclosures, has contributed to a more standardised understanding of ESG expectations. Many managers now publish narrative-rich reports and case studies that illustrate how ESG considerations influence corporate behaviour, with quarterly stewardship updates becoming more common.
”ESG is now treated as a core aspect of investment communication, enhancing transparency and investor confidence. Regular reporting also allows firms to reflect emerging ESG issues in near real time and to communicate progress more dynamically.”
Adams also indicates that while proxy voting disclosures have improved, gaps remain in the depth of explanation provided, particularly when third-party advisors are involved. This can affect investor confidence in the authenticity of stewardship efforts.
“While outsourcing provides consistency, it can reduce transparency in ESG-sensitive or controversial proposals and erode client confidence in the authenticity of stewardship.”
The piece highlights a shift in how ESG is framed within firms. While commitment remains strong, there has been a move toward more generic policy statements and a reduced emphasis on detailed integration processes. ESG is increasingly positioned as a risk management tool, with less focus on its potential to drive investment opportunity or differentiation. This trend may lead to inconsistencies in ESG application across asset classes and styles.
Despite these challenges, Adams suggests that overall ESG maturity is increasing. Enhanced transparency and stewardship practices are helping investors better assess how ESG risks and opportunities are managed. Clearer reporting supports accountability and may reduce the risk of greenwashing, particularly in the face of heightened regulatory scrutiny.
Adams concludes by noting that strong ESG stewardship practices can contribute to long-term value creation and serve as indicators of broader investment competence.
“Firms with thoughtful, well-articulated ESG policies are more likely to anticipate shifts in consumer preferences, regulatory expectations, and reputational pressures.”
As ESG expectations evolve, managers with transparent and consistently applied strategies may be better positioned to maintain investor trust and meet regulatory requirements.