Governing through ESG and the green spirit of asset manager capitalism

Abstract

The outsize influence of asset managers raises important questions about the relationship between fund managers and the companies in which they are invested, with recent theorists of asset manager capitalism suggesting an emergent disinterest in the performance of individual firms among large asset managers. Investors’ growing focus on environmental, social, and governance (ESG) data in financial decisions offers one window into this relationship. Drawing on interviews with the ESG team and a group of portfolio managers at a large European bank, I argue that ESG analysis is seen as valuable not because of some unique social, environmental, or even financial benefits, but because it helps asset managers more effectively govern the companies in which they are invested by objectifying and depoliticizing their interventions in the governance of invested companies. This contributes to emerging theories of asset manager capitalism by calling attention to the strategies asset managers develop to exercise control over invested companies.