As ESG faces political headwinds, Schroders reaffirms its long-term commitment, reframing sustainability as core investment risk management.
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When your business is managing more than a trillion
dollars in assets under management across 60 investment desks, having an
ongoing commitment to sustainable practice isn’t optional, even if the current
political headwinds are increasingly inclined toward minimizing its importance.
As increasingly skeptical discourse around
sustainability has seen other institutions wobble on their commitments,
Schroders’ Head of Sustainability, Americas, Marina Severinovsky, says the
company’s approach to ESG risk assessment has remained deeply embedded in its
business philosophy.
Speaking at CeFPro’s recent Risk Americas flagship
event in New York, Severinovsky told delegates that Schroders has moved far
beyond virtue signaling or symbolic membership in global groups or
organizations.
Instead, sustainability is treated as an investment
risk management discipline – an operational lens through which risk and return
are evaluated.
The global context within which ESG strategies operate
has undeniably shifted in the last six months as climate ambition has stalled
and policy action and corporate commitments have seen a 4-year decline since
2021.
Nevertheless, the physical and transition risks tied
to climate change, biodiversity loss, and resource degradation have become more
visible and material to long-term investment outcomes.
According to recent data from the World Economic
Forum, environmental threats remain the most pressing risks to global stability
over a ten-year horizon, even as short-term headlines are dominated by armed
conflict and AI-driven disruption.
Despite the political backlash that has become
synonymous with the early days of the Trump administration, Severinovsky says
demand for ESG integration among asset owners remains healthy.
Approximately 80% of Schroders’ RFPs now include ESG questions,
revealing both regulatory pressures and genuine interest in understanding how
sustainability factors impact portfolio resilience.
Interestingly, Severinovsky says, even in the U.S –
the epicenter of the so-called ESG backlash – client interest remains robust,
with thematic investing gaining ground as a favored approach.
From an investment strategy standpoint, the
organization’s framework has solidified, she told the conference. Rather than
relying on top-down exclusionary tactics or blanket transition targets, Schroders’
focus, as an active manager, is on bottom-up, investment-driven analysis.
Proprietary tools assess corporate and sovereign
externalities – like labor practices, carbon emissions, or dependence on
natural capital – and quantify how those factors might translate into future
financial liabilities.
These quantified risks are then factored directly into
valuation models and engagement strategies.
Climate risk remains a central pillar of the strategy,
with Severinovsky highlighting the scale of scope 3 emissions linked to
Schroders’ investments, comparable to those of an entire country, making
climate integration a financial imperative.
