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WHAT’S INSIDE YOUR FEBRUARY ISSUE NEW TAX PROPOSALS SIGNED INTO LAW The President gave effect to 2021 tax proposals by signing three tax Acts into law Page 5
EXCHANGE CONTROL QUESTIONS ANSWERED The penalties of failing to adhere to exchange controls in South Africa could result in forfeiture of assets or even imprisonment
28 February 2022
TIMOTHY RANGONGO Editor: MoneyMarketing
I
nvestors are becoming increasingly concerned about questions of sustainability and equity. There is growing interest in Environmental, Social and Governance (ESG) related investing, especially post-COP26. The approach, however, is still fairly new and undefined. BlackRock CEO Larry Fink recently prodded shareholders and governments for action. In his annual letter to CEOs, he said
First for the professional personal financial adviser
governments should offer more guidance on sustainability policy, regulation and disclosure across markets. Across the globe, financial literacy is already an ongoing challenge. Add to this teaching people about sustainable investment, and how they could integrate it into their investment portfolios or consider different ways to align their investments with personal values – and it becomes even more challenging. It is a deep challenge, and there is no taxonomy agreed upon, says Michael Young, manager of education programmes at the Forum for Sustainable and Responsible Investment on ESG education. Though Young, like Fink, mentions governmental structures as critical to disseminating ESG education, he says it ultimately has to come from asset managers and financial service providers, too; firms that offer ESG-related products. “When selling an investment product to a client, we are entering into a longterm relationship with our client. It is fundamental that we build trust between ourselves, in terms of understanding each other’s expectations and what we can deliver to each other; and not just for ESG but investments generally,” says Brunno Maradei, global head of responsible
investment at Aegon Asset Management. When selling a fund to a client, among some of Maradei’s targets are ensuring that the fund meets its risk-return expectations, including the client’s preferences. He gets into details with clients about what they want to achieve with their capital, what their ESG objectives and sustainability risk tolerances are. This discussion includes having realistic expectations of what can be delivered. The early stages of ESG investing also coincide with the trillion-dollar transfer of intergenerational wealth. But, numerous studies cite some disconnect between financial advisers and the inheriting generation: the millennials, who are also in their prime earning years and more inclined to invest in ESG. There are questions of whether there is any need for education, especially for this demographic of 25- to 40-year-olds – and if there is, how it is delivered. Should consultations continue the same way as previous generations of investors, or is there a need for different ways to accommodate this group’s different perspectives? “Financial advisers and asset managers have to be flexible. Can the education be delivered the same way across the board? I don’t think so. The world has changed so much,” says Young.
“Firms typically lose 70% to 80% of assets when transferred from one generation to the next”
ETF TRENDS TO WATCH IN 2022 Environmental, Social and Governance/Sustainable ETFs will exceed $200bn of assets under management Page 11
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Who is responsible for educating investors about ESG?
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ESG: PROPERTY PERSPECTIVE Listed property companies have increasingly become aware of the role they also need to play in society
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Michael Young, Manager of Education Programs, The Forum for Sustainable and Responsible Investment
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