Recent disruption in Invesco’s ESG team ranks detracts from the considerable investment the firm has made in its ESG resources over the past few years. Most members of the original ESG team joined Invesco within the past five years, and turnover among senior staff has been higher than that of U.S. asset managers of a similar size. The 30-person team is mostly well-staffed, but certain verticals within the broader team are stretched thin considering Invesco manages more than USD 1 trillion in both active and passive strategies. Specifically, the governance and proxy-voting team lost its sole senior governance analyst in late 2022. While the firm was quick to backfill the role with a junior governance analyst, concerns remain about the team’s capacity.
More hands on deck could help the firm keep up with industry best practices on transparency and disclosure. The newly hired junior analyst is responsible for providing investment teams with voting recommendations, but investment professionals lead engagements with the help of Vataj. The firm’s record of support for key ESG shareholder resolutions is high, but it does not outline environmental or social guidelines in its proxy-voting policy, nor does it disclose the rationales behind voting decisions. To its credit, the firm has expanded its thought leadership on climate issues, which increases its clients' and the industry's understanding of sustainable investing.
Finally, Invesco’s collection of investment teams each maintain autonomy over their approaches to ESG integration. This aligns with the firm’s decentralized model, which lets each team pursue its own investment style. The firm does not have a considerable amount of assets under management in ESG-focused strategies, but its efforts seem thorough. In 2021, Invesco committed to integrating ESG criteria across 100% of its AUM by 2023. However, it recently renounced that goal to avoid trouble at the hands of regulatory bodies, and instead shifted its focus to specific and rigorous internal guidelines for strategies marketed as ESG-integrated or sustainability-focused. ESG focused compliance members under newly hired implementation manager audit adherence to these guidelines, establishing an additional layer of checks and balances.
The firm continues to use its size to participate in industry advocacy through SEC comment letters and different investor coalitions. Specifically, the firm signed onto major initiatives including the Net Zero Asset Managers initiative and Climate Action 100+.Those positive attributes aside, instability in the teams creates some concern and ESG integration among Invesco’s disparate teams warrants long-term monitoring.