The inaugural meeting of The Senior Leaders ESG Forum brought together a group of leading wealth management firms to discuss the opportunities and challenges associated with ESG investing. 

The forum was chaired by Compeer, the benchmarking and research firm, and hosted in conjunction with Objectway, a leading digital wealth & asset management software provider. 

Participating firms were a broad and diverse representation of the wealth management industry including Quintet, Punter Southall Wealth, Quilter Cheviot, Goodbody and Killik. Presentations made by Compeer, Objectway and Macfarlanes, a leading law firm, provided insights and helped guide a wide-reaching discussion.

Key points arising from the discussion included:

• Aligning ESG philosophy, investment strategy and data is crucial if firms are to avoid greenwashing.
• Regulation is expected to drive and ultimately define the delivery of ESG to clients.
• Client reporting is a complex challenge due to lack of standardisation of ESG-related data.

The forum discussion centred on the state of ESG readiness in wealth management as well as the following:

• What are the key business objectives to consider when forming an ESG strategy?
• How have client expectations around ESG evolved during the pandemic?
• What could the ESG regulatory journey look like?

The question of how to avoid greenwashing will become more prevalent as firms develop their ESG proposition.  Beyond best intentions, they should look to safeguard themselves through portfolio transparency and utilise suitability reviews to gain a clear and meaningful understanding of client ESG preferences.

Considerations around client preferences and data quality are imperative as firms adapt their client reporting function to uphold the requirements of upcoming ESG regulations.  They acknowledge technology has an important role to play in dealing with the complexities in a consistent and cost effective manner.

Based on the discussions there is a clear need for definitions and rules on ESG from the regulator. 

All eyes are on the FCA to see whether they will follow in the footsteps of the EU or carve a different regulatory path. Recent changes to MiFID II and SFDR have not made it clear what is expected from wealth managers and advisers in the UK. The consensus among wealth managers is that while client demand is bringing attention to ESG, ultimately, regulation is what will drive and shape their ESG offering. The input of the FCA and dialogue with firms would be greatly valued and will be consequently sought at future meetings of the forum. 

The useful insights emerged during this inaugural meeting have been collected in a short research paper available for download HERE.

The Senior Leaders ESG Forum will continue to serve as a platform for wealth management firms to exchange ideas, shape thought leadership and help define industry best practise. 

Compeer and Objectway will host quarterly meetings with a research led focus covering ESG and other emerging relevant topics in further detail. 

For further information and comment, please contact:

• Compeer: Bhaven Patel (bhaven.patel@compeer.co.uk)
• Objectway: Tariq Khan (tariq.khan@objectway.com)
• Macfarlanes: Shailen Patel (shailen.patel@macfarlanes.com)