Summary findings

The report assesses 77 of the world’s largest asset managers, representing over US$77 trillion in assets, on human rights, labour rights, and public health. While more firms now have social-issues-related policies than in 2020, one-fifth limit these to ESG-labelled funds. Only a minority adopt standards more ambitious than international conventions on weapons, slavery, or child labour. Public health policies remain weak, with most commitments limited to tobacco. Indigenous rights and the principle of Free, Prior and Informed Consent (FPIC) are rarely considered.

On corporate engagement, most managers conduct proactive and reactive engagement. Worker health and safety, and diversity and inclusion, are prioritised. Members of collaborative initiatives perform better, though many have not aligned investment policies with these principles. Engagement plans for 2023 emphasise supply chains and the Just Transition.

Risk management remains inconsistent. Most managers use third-party data, but key social metrics such as wages or pay gaps are often omitted. Nearly two-thirds do not conduct regular supply chain reviews, and public health is rarely integrated into financial risk assessments. Data gaps and lack of standardisation are seen as the biggest barriers to progress.

Performance varied by geography. European and North American managers generally outperformed those in Asia Pacific. Six of the top ten performers were European, while the four largest global managers – BlackRock, Fidelity, State Street, and Vanguard – ranked poorly, none placing above 50th. Size was not a barrier to stronger performance; T. Rowe Price ranked third with over US$1 trillion in assets.

Strategy and investment policies

In 2022, 94% of managers reported having a social policy, up from 85% in 2020. However, 19% restricted social considerations to ESG funds only. Just over half applied policies across all assets, with dedicated social policies largely confined to European firms.

Most policies covered human rights (96%) and labour rights (92%), though only a minority went beyond minimum international standards. The most common commitments addressed controversial weapons (86%), modern slavery and forced labour (49%), and child labour (44%). Less attention was given to living wages, pay gaps, or diversity.

Only 13% of managers integrated FPIC into investment commitments, and just three gave examples of applying it in decisions. Public health commitments remain limited; 66% excluded tobacco, but fewer addressed gambling (49%), alcohol (35%), or emerging issues such as nutrition, vaccine equity, or workplace mental health (fewer than 10%). Exclusion policies rarely extended beyond ESG-labelled funds.

Less than a quarter of managers had policies addressing sovereign actors engaged in human rights violations. AXA Investment Managers was highlighted for applying restrictions to sovereign bonds issued by countries with poor human rights, corruption, or transparency records.

Corporate engagement

Most managers combine proactive and reactive engagement. Sixty-six per cent reported proactive engagement, though this was less common in Asia Pacific (31%) compared to Europe (77%) and North America (68%).

Worker health and safety and diversity and inclusion were the most common engagement themes, with nearly three-quarters of firms prioritising them. Engagements also addressed supply chain due diligence, data privacy, and public health. Examples include investors pressing pharmaceutical firms to link executive pay to vaccine equity, AXA engaging Meta on data privacy, and China Asset Management engaging a liquor company on disclosure and marketing practices.

Collaborative initiative membership was associated with stronger performance. However, many firms engaged on issues such as nutrition or access to medicine without having related investment policies. Looking forward, managers are expected to increase focus on supply chains, partly in response to European due diligence legislation.

Risk analysis, management, and mitigation

Over two-thirds of managers combined third-party social data with in-house assessment methodologies. Yet important indicators such as wage data, ethnicity pay gaps, or contingent workforce proportions were often excluded. European managers were more likely to assess social metrics than those in Asia Pacific.

Only 35% of managers reported regular direct supply chain reviews; 62% relied on third-party data and 57% acted only after controversies. Just 16% analysed public health-related risks, with examples mainly limited to COVID-19 impacts. Legal & General Investment Management demonstrated leading practice by factoring nutrition into investment and engagement, including pressing Tesco to set healthy product sales targets.

Half of respondents identified data availability and standardisation as the main barrier to stronger action. Others cited limited knowledge of social issues and the lower prioritisation of these themes by external stakeholders. The report recommends that managers strengthen disclosure, improve methodologies, and embed more robust engagement and exclusion practices to mitigate social risks effectively.