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EQ Investors: Three things we think will happen in 2022

Adviser due diligence on discretionary fund manager’s (DFM) will need to be extended to look at expertise in sustainable investing, the support investment managers can give advisers to establish suitability and answer client queries, and sustainability reporting. A successful partnership with the DFM will help financial advisers risk-mitigate in this increasingly regulated space as they gain confidence in the subject.

At EQ we are working to provide our financial adviser community with educational resources to help navigate the sustainable investment space and providing a choice of suitable investment solutions to meet their sustainability preferences.

Climate change comittments under the microscope, and biodiversity loss as the next big challenge

Tackling the climate crisis needs to remain at the forefront of the world’s focus in 2022, and we expect there to be a galvanization of action across private and public sector to make effective progress – before it is too late.

Just as governments will be held accountable to their decarbonisation plans, this will also be the year where action on the widespread climate commitments by asset managers and owners will be demanded. I expect there to be a big focus on finding methods to ensure real-world impact and avoid the risk of decarbonising investments detached from reality. Re-introducing the social impact of the green transition will also be key to make it just for all and provide the needed political popular support.

To do this, we have much to learn from the different net zero strategies that have and will shortly be published across the industry. I hope that all will take this opportunity to collaborate, share best-practice, and use their collective leverage to move us to a net-zero world at the speed required.

The increasing threat of biodiversity collapse is our society’s next, and interrelated, challenge. Only slowly are investors recognising that most investee firms are reliant on the natural world and not managing this relationship sensibly. I anticipate big steps forward in bringing investors together to engage on drivers of biodiversity, through the Finance for Biodiversity Foundation for example.

In addition, we will see the first of beginning of a framework to assess and report biodiversity risks through the Taskforce on Nature-related Finance Disclosures. These will be the building blocks for investors to integrate this alongside climate change.

Force for good

We all know the frightening environmental crisis our planet is facing. To reflect this, we are constantly looking to find new ways to connect clients’ investments with their values.  I will continue to engage with those asset managers lagging behind whilst promoting deeper change to ensure our industry is a force for good.

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