Professional investors are not tolerating "weakness" or failure in the responsible investment space when selecting fund managers, research by Columbia Threadneedle has found.
Some 85% of professional investors believe responsible investment is a crucial part of manager selection, while 72% of institutional and wholesale investors said not meeting expectations was a "deal breaker" when considering asset managers that can help them meet their objectives.
Michaela Collet Jackson, head of distribution, EMEA, at Columbia Threadneedle Investments, said: "It's clear that professional investors will now avoid - or even divest from - asset managers that are not meeting their RI expectations, be it by way of product offering, investment approach or client reporting. This sends a very loud message."
Some 77% of those surveyed believe responsible investment is key to pursuing financial outcomes in portfolios, while 86% agree it is a fiduciary requirement.
Almost all respondents see responsible investment as a means to add value, enabling them to meet clients' evolving preferences.
The research also found that many investors are willing to divest from Article 6 funds if they are not changed to meet Article 8 or 9 requirements under the EU's Sustainable Finance Disclosure Regulation.
While three quarters would support a conversion from their existing Article 6 funds to Article 8 or 9, nearly half are willing to divest should these requirements not be me.
There was particularly strong demand for Article 8 equity funds (86%) and Article 8 fixed income funds (81%), but less interest in multi-assed or exclusion-based equivalents.
Demand for Article 9 - the most stringent of the SFDR classification - followed a similar pattern.
The most popular responsible investment or ESG themes for investors were global water (86%), climate change (83%) and biodiversity (77%).
Columbia Threadneedle Investments surveyed 110 professional investors across the UK, Singapore and Europe.
