GOVERNANCE
HOW TO EMBED ESG BESTPRACTICE IN YOUR BUSINESS
PURPOSE DRIVEN COMPANIES OUTSHINE THE REST By Victoria Reuvers
“Purpose is not the sole pursuit of profits but the animating force for achieving them … In fact, profits and purpose are inextricably linked.” – Larry Fink
In contrast, not offering ESG may
Sustainable investing is growing, both
In a Morningstar study of 948 people,
in supply and demand, but several
72% of investors are likely to consider
advisers are still confused on how best to
sustainably-minded solutions; with
execute. At a high level, many advisers
broad-based interest across millennials,
acknowledge the need to future-proof their
generation-X and baby boomers:
actually isolate your business from a significant and growing portion of the market (as evidenced in the following table), where 72% of investors are at least moderately interested in ESG investing.
KEY EXECUTION MATTERS The far more difficult question—and one we seek to advance in this article —is how to execute using ESG solutions. For example, you may like the idea of offering ESG in your practice, but there is little evidence available to tell you the best way to structure the financial planning process. With this in mind, we break down three of the building blocks that are likely to be foundational in a great execution plan.
practice and/or attract new types of clients. However, implementing an environmental, social and governance (ESG) solution
Distribution of My Sustainability Profile Preference Score (weighted)
for a client is still problematic for some. Questions like “how do I raise it with my clients?” remain commonplace, so we explore the road ahead and seek a reasoned approach to execution. When evaluating your value proposition, it is useful to think about balancing monetary goals with client values:
Client Money Goals
Great Financial Advice
Client Life Goals
Under the “value proposition” lens, it is hard to argue that sustainable-investing solutions—including ESG portfolios—are a fad and should thus be excluded from your toolkit.
My Sustainability Profile Score Source: Morningstar research paper, April 2019: “The True Faces of Sustainable Investing: Busting the Myths Around ESG Investors”.
