Recent cuts in environmental, social and governance (ESG) research capacities at investment banks’ brokerages which sell market information to fund managers have raised concerns and led to speculation that further cuts are on the way.
The moves reflect belt-tightening by investment banks still reeling from the credit crunch. In December, Deutsche Bank ceased its dedicated corporate governance research, while JP Morgan ended its ESG service, absorbing it into mainstream equity research. In November, Citi Investment Research disbanded its socially responsible investment (SRI) team, following cost-cutting by parent company, Citibank. The loss was significant, given the team’s reputation; it was voted the top brokerage firm for SRI research in the 2008 Thomson Reuters Extel/UKSIF survey.