ESG- The momentum is there - now we need some standardised metrics to measure performance
Expert: Nic Spicer, PortfolioMetrix
Facilitator: Paul Miles, Silverback Consultancy
The State of Play
- Client awareness and demand is increasing
- In 2018 $30tn invested in ESG (49% of all managed assets in the UK and 26% in US)
- Should ESG be the mainstream slot within investment portfolios
- Confusing terminology within the sector
- ESG funds have generally outperformed in 2020 (less exposure to banks) but obviously, despite academic literature, caution is advised
- Adviser firms will need to determine their clients’ ESG preferences
- Adviser firms will have to disclose on their websites how they take sustainability risks into account in their process
Key Challenges
- Understanding ESG terminology
- Providing an ESG solution to clients
- Understanding the various measurement and rating agencies
Conclusions/Solutions
Adviser firm action plan:
- Read up on ESG - PortfolioMetrix have written a white paper – refer to their website
- Create an ESG policy
- Add ESG questions to your risk questionnaire/fact find
- Know your product providers
- Adequately document your findings
The Investment Association (IA) has carried out a consultation with a number of its members with the aim to categorise and provide standard definitions
