Are you ready to meet client demands around ESG?

by | Dec 16, 2020

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The results are in

Our adviser network recently took part in a survey on environmental, social and governance (ESG) investing. We aimed to ascertain client demand and adviser readiness for solutions aligned with ESG requirements.

The results showed that over 80% of advisers believed Blackfinch’s commitment to ESG investing was important, or very important, to their clients. However, less than 50% stated that their business was fully prepared to accommodate clients’ ESG focus.

Over 35% responded that they were in the process of preparing. Similarly, nearly 20% stated that while they had made a start on preparations, they would appreciate further advice.

 

Responding to clients’ ESG focus

Advisers’ awareness of their clients’ attitudes to ESG is part of wider change. Across society, we’re seeing a greater social conscience. From recognition of the climate change emergency to the need for social justice and equality, people’s views are shifting.

For many the coronavirus pandemic has crystallised their thinking, with concerns about the collective legacy – what will the world look like in decades to come? Within this, clients are increasingly concerned about the impact of their investments. With a growing interest in sustainability, clients want this to be based on an ESG approach.

At Blackfinch one of our foremost aims is to preserve family wealth for future generations. We work with advisers to help clients create a legacy that will mean a better world for their children and grandchildren. For Blackfinch and our customers ESG is part of that.

 

Gaining an understanding of ESG

ESG can often seem difficult to pin down, with no one single definition and many different approaches. But, at its heart, it’s about investing with consideration for the impact a firm has on the environment, on society, and how it’s managed internally.

ESG is key to creating a more sustainable world and to the strong future performance of individual firms. By focusing on ESG factors, investment managers can work to ensure that firms and funds in which they invest are taking a responsible approach, now and in future.

A provider with solid ESG credentials is what’s needed. That means a firm that works with ESG at its core, is transparent on its ESG processes, can help advisers educate themselves and their clients and offers ESG-based solutions.

 

ESG: another string on the provider bow

One thing ESG doesn’t mean is advisers or clients having to sacrifice any other element of the service and standards they’re looking for in a provider. It remains a given that advisers can look to partner with providers of ESG solutions bringing a solid track record overall.

Advisers can seek out firms offering higher return potential and lower fees and charges, backed by expert yet accessible teams. The transparent approach should be evident in quality marketing materials and good communication. It also goes without saying that providers need to have rigorous due diligence processes.

When viewed like this we can see that ESG is one key component of what firms offer. It also complements and enhances existing processes, bringing greater assurance of integrity.

 

Establishing genuine provider commitment to ESG

Advisers already have a multitude of things to consider when assessing if a partnership with a provider could be suitable for their clients. How can you know that a provider is the one-stop shop you need, including that their ESG positioning is genuine, embedded in their values and their investment processes?

It’s important to weed out the firms that ‘greenwash,’ only paying lip service to the concept of ESG. As a starting point, advisers can look for providers with a background in ESG investing. They might have expertise in an area such as renewables. Or it may stem from investing in innovative new firms making a positive impact.

Adviser can also look for providers that are signatories to the Principles for Responsible Investment (PRI). A firm that has become part of this United Nations-backed global network and has publicly shown its dedication to ESG investing. It means the provider is working within a community seeking to build a more sustainable financial system.

 

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