A potential challenge for an asset owner implementing responsible investment is:

A key challenge forasset owners(e.g., pension funds, sovereign wealth funds) in responsible investing is ensuring that theirfund managers align with their ESG objectives. Many asset managers interpretfiduciary dutynarrowly—focusingonly on financial returnsrather than incorporatingESG risks and long-term sustainability factors.

While ESG indices and consultant analysis (A and B) are important, themain challengeremainsensuring alignment between asset owners and managers.