BVI member survey: fund industry making progress with the integration of sustainability risks
A representative survey among 61 BVI member companies demonstrates, that a vast majority of our members are working on integrating the systematic assessment of sustainability risks into their risk management processes. According to the survey, 90 to 95 percent of the survey participants have already started to integrate sustainability risks in their risk management process. 10 percent of the companies have already completed this process.
Further important results of the survey include:
- Environmental and governance risks have been largely integrated, whereas social issues are slightly lagging.
- Lack of standards, data quality and availability of data are the main hurdles to assessing sustainability risks; this is particularly true for data on small caps, derivatives, and illiquid assets such as real estate, private debt, private equity, and infrastructure.
- Regarding methods to currently assess sustainability risks, market participants focus on exclusionary approaches; more sophisticated methods such as stress tests and factor models are less common, particularly among small and medium investment companies, real estate companies and investment firms.
The survey aimed to identifying potential weaknesses and need for action in the integration of sustainability risks in the risk management process at an early stage and to develop industry standards. The 61 companies surveyed in August of this year represent 94 per cent of the assets managed by the German fund industry. Moreover, all kinds of managers are represented in the sample, from investment securities companies (29), real estate investment companies (21) to portfolio managers licensed as investment firms (11).