Expert: David Beacham, Business Development Director, Head of Regional Sales, Facilitator: Jo Goddard, Green & Good Consulting
ESG – what does it mean to you, your business and your clients? The importance of personalising your proposition to the benefit of all stakeholders.
- ESG is not going away, so it is good practice to focus on this now and think about developing a proposition for your business
- There are cost effective and impactful ways for companies to start on this journey
- Engaging clients can be a proactive tactic and can improve your relationships. Including information on your socially responsibly business in communications is helpful marketing
Environmental, social and governance issues are increasing in importance as the world experiences changes in climate, social justice and gender equality issues. These topics are here to stay and governments all over the world are reacting through regulation. Current regulations for this area affect large and listed organisations in the UK, EU and US. Within the investment management space, we are used to thinking about ESG in terms of funds and investments, but this should also be applied to the business and its operations. In this session we discuss what that looks like, what advisers have implemented successfully and what lessons we can learn going forward.
1. ESG is not going away, so it is good practice to focus on this now and think about developing a proposition for your business
From the start of ethical investing, through to SRI and now ESG – the topics around this area are only increasing as we become more aware of these issues. Regulation has caught up with the voluntary practice in terms of fund management and for corporate sustainability practices in large and listed firms. As smaller businesses, having an ESG proposition for your firms is good for your clients and your culture in terms of attracting talent and improving relationships with clients.
There are more opportunities than ever before to make it a more individual proposition – the industry is getting bigger with more professionalised with tools to help.
The UN Sustainable Development Goals are a useful way to aid engagement – of course, it’s not possible or appropriate to embrace every goal but they do help find what is most important to the business, clients and employees.
Some elements of greenwashing still exist, and firms must be careful to avoid it. It helps enormously to use a term other than ESG – in fact, research shows that it’s not a term that’s easily understood outside of the investment manager space. It is better to use terms that share your beliefs in a way that your clients understand and that bring out your own ideals in an authentic way. Aligning your approach to a purpose will further allay greenwashing claims.
2. There are cost effective and impactful ways for companies to start on this journey
Smaller firms don’t necessarily have the resources to develop an ESG proposition. It’s important to keep in mind that it doesn’t have to be difficult, expensive or time consuming – and that a genuine and bespoke approach helps with marketing and can even provide cost savings. It can be helpful to think about goals and targets going forward as well as retrospective performance. Purpose driven organisations make ESG core to their purpose and set strategic goals around it – giving an even more nuanced approach.
How can firms start to be socially responsible? It can be a difficult thing to achieve – especially for those in listed buildings with no energy efficient measures or with rented properties with no control over lighting, heating etc.
However, there are some approaches that have worked for some advisers, switching to renewable energy, for example. Stopping or reducing printing is a good pragmatic starting point. It has many aspects to it, cost saving as well as resource (paper, ink) saving however, it must be handled carefully with older or vulnerable clients who like everything to be printed. It can help to set goals around these initiatives, such as reducing printing and engage everyone in the business and clients in helping reach that goal.
Offering employees salary sacrifice schemes for bicycles and electric vehicles is another way of demonstrating your commitment to this area. And offering a space for charging electric vehicles, where possible, is another step in the right direction.
The Covid lockdowns have helped with prior resistance to using technology with use of Zoom becoming more commonplace and better understood. This makes such a difference and has a positive environmental impact – it also helps save time and costs, for clients and the business.
In time we envisage more legislation for smaller businesses so there is perhaps more risk in not having sustainability measures in place than having nothing.
3. Engaging clients can be a proactive tactic and can improve your relationships
Clients are increasingly interested in green investments, and it follows that they may also be interested in advisers who have taken this into consideration for their own business. It’s a good time to start doing it now to get ahead of others and expected regulation.
To develop a firm’s own proposition, it can be useful to consider engaging with your clients to understand what will resonate with them. This helps you not only better understand them but will also help to build relationships through this very human-level conversation. It may also help extend the conversation into their own funds and attitudes to risk, helping you to help them more.
4. Including information on your socially responsibly business in communications is a smart marketing technique
As ideas develop it’s useful to communicate these to clients and engage them along the way. It’s also useful if you have already taken some steps, such as switching to renewable energy, to promote this, along with the positive impact this has had.
We are seeing more children driving parents to make decisions about sustainable investments, and therefore more communication about your ESG projects signals to them your alignment with their values. Inform clients through email newsletters, e-reports – then donate to a tree fund, this demonstrates a tangible action you have taken – as well as reducing postage costs!