We see ESG themed investments as being poised in prime position to assume the mainstream slot within the majority of investment portfolios. This should, in turn, enhance the profile of the “pure” version of Impact, thereby helping maintain its ascendancy towards becoming the investment style of choice within the UK.
As we constantly monitor the progress of the sustainable and impact investing market, it is clear that interest is turning into action with evidence of exponential growth. As with all areas which see fast growth there are positives and negatives and these bring their own challenges. Here are my five key observations:
The trade press narrative
A rhythm of weekly sustainability themed articles has been established which have now moved their focus on from questioning whether there is investor demand for sustainable investing to concerns over greenwashing!
More adviser firms are wrestling with the impending regulatory requirements:
- for advisers to understand if their clients have any ESG or impact preferences when investing,
- to explain how they have taken these preferences into account,
- to explain how any recommended investment solution meets the clients preferences.
Increased net inflows
The significant growth of net inflows to sustainable investment funds, evidenced by Morningstar data on US sustainable funds with net inflow of $10bn in just the first quarter of 2020, already doubling the sustainable fund inflow for the entirety of 2018.
Asset manager engagement
The rapidly increasing number of asset managers that claim ESG is baked into their investment process. This is evidenced by the United Nations Principles for Responsible Investment (“PRI”) launched in 2006 with 63 signatories’ and by March 2020, this number grew to include more than 2000 asset managers representing over $80 trillion AUM across the globe.
Core to the investment strategy
The positioning, by financial advisers and wealth managers, of sustainable and impact investment as a risk management tool appropriate for use in all investment strategies, not just meeting the needs of those clients who have a personal passion to see their wealth deployed in this way.
Impact Investment Academy 2020
Our Impact Investment Academy (IIA) this year will focus on some of the challenges that arise out of this growth:
- How do Financial Advisers and Planners engage their clients in these discussions?
- How do you easily keep track of the emergence of new funds in this universe?
- How do you identify the asset managers who are genuinely delivering positive impact?
- How do you clearly and consistently articulate the different ways clients can invest to meet their emerging objectives in this area?
This is our tenth event but our first virtual Academy and whilst we will miss meeting in person, the online format does have the potential to enable us to offer so much more in terms of content, collaboration and community. You will have the opportunity to network with other delegates, speakers and supporters as well as engage with live chat and questions throughout the day.