How do you demonstrate the commerciality of a social impact/philanthropy proposition to shareholders and the EXCO?

Wealth Management and Private Banking

20 November 2019

ClientESGWealth Management and Private BankingWealth Management and Private Banking

Key questions form clients:

  • How far will the regulator go with ESG? What is the regulatory outlook going to be in the next five years with regards to ESG?
  • How do we explain ESG strategy to clients?
  • Are we really sure that ESG products can outperform if we are basing our theories on historical data where the economic and social climate was different?
  • Do we paint funds green funds or do we adjust our holdings?
  • How will ESG impact suitability, where is regulation going with this? 

Key discussion points: 

  • There seems to be a knowledge gap amongst clients: they do not seem to understand what responsible investing is in practice and there is a large amount of education needed. Further to this point it is difficult for firms to articulate the impact of investing in ESG to their clients which is something they want to see. How does the WM quantify the benefits of not investing in tobacco for example?
  • ESG has to be incorporated within firms if they are to capture the new generation of wealth. 
  • In practice what we have commonly found is that everyone’s view of ESG is very different and it will come down to fundamental taste and beliefs. 
  • Client A has been developing out their ESG offerings heavily, especially in their passive products. They use an echo voting system which allows the fund manager with the biggest stock to have the vote of the firm as well. 
  • Invesco also have a dedicated ESG research team who assess products and develop a ESG rating. 
  • The sentiment to moving to ESG is that it will be costly especially if new staff are needed for upfront research.
  • Clients are keen to know how ESG will fall into suitability and whether this will be something enforced by regulation.
  • An interesting point which they made was if the WM/PB implements an ESG strategy and stops holding munitions/tobacco how will they serve clients who wish to invest in these?
  • A query which came up is that if we move from “bad” products to “good” products, wouldn’t the market shift from a fall in demand and therefore the “Bad” products will give higher returns and as a result people will want to invest there again
  • There was a good reception around the room from the mention of LTV and the Embankment Project, potential follow up here.


Facilitator: Suzanne Spink, Independent Consultant

Experts: Roopalee Dave, Director, Wealth and Asset Management & Simon Abrams, UK & Ireland ESG and EHS Transaction Support Head, EY