The majority of asset managers continue to overlook key social issues as part of their wider responsible investment strategies potentially damaging portfolio performance, new research reveals.
The LGT Capital Partners’ annual ESG Manager Assessment finds that just 47 per cent address human rights in their ESG policies.
This compares with 67 per cent that include climate change.
Tycho Sneyers, Managing Partner at LGT Capital Partners and member of the PRI Board, says inclusion of environmental risk was essentially obligatory for asset managers following implementation of compulsory reporting standards such as the Taskforce on Climate-related Financial Disclosures (TCFD) and the Sustainable Finance Disclosure Regulation across the EU.
“A decade of climate-related investor pressure has made it almost mandatory for managers to include climate in their ESG policies. This is the path of least resistance with standardised frameworks, widely accepted metrics such as GHG emissions and clear regulatory expectations.”
Sneyers added that human rights inclusion was “a very different matter”, noting the absence of equivalent regulatory impetus to force asset managers’ hands.
“The UN Guiding Principles on Business and Human Rights (UNGPs) are voluntary and no mandatory human rights disclosure framework carries the same weight as TCFD. Managers who address human rights in their ESG policies have therefore typically made an active choice to do so. This points to the importance of the topic and the risks that come from not taking human rights into consideration.”
The LGT Capital Partners ESG Report 2026, covering 191 asset managers, owners and advisers across different regions and asset classes, finds that while human rights considerations are becoming a core component of responsible investment frameworks, as social and governance risks tied to labour practices, supply chain exposure and community impacts can have material consequences for portfolio companies, application is patchy.
Sneyers says: “While most managers reference international standards such as the UNGPs in their responsible investment policies, meaningful implementation remains uneven across the industry. Understanding how managers embed human rights thinking into their due diligence, active ownership and monitoring activities is therefore essential to distinguishing genuine integration from policy level commitment.”
2025 research from MSCI reported that failure to consider human rights risk could come with a hefty price tag for portfolio performance.
MSCI estimates that up to USD652 billion in revenues among at-risk companies may be linked to forced or child labour. More than 70 per cent of MSCI ACWI Index constituents were subject to at least one modern-slavery or human-rights-related regulation.
Leslie Swynghedauw, Executive Director, MSCI Research & Development, says such exposure can translate into regulatory penalties, operational disruptions and reputational damage that may meaningfully affect performance.
Further, between 2014 and 2025 MSCI found that companies with stronger supply-chain labour practices tended to outperform peers with weaker practices, generating higher cumulative returns.
Swynghedauw said: “This suggests that stronger human-rights practices not only align with global norms and expectations but may also signal greater financial resilience over the long term.”
