ESG session at the annual Grant Thornton LLP (US) conference

There were a number of interesting facts and questions raised which we have listed below.

1fs Wealth provides wealth owners with a sophisticated ESG scoring tool, allowing them to track and improve their sustainability scores for diversified portfolios. For a demo please email marcus@1fs.co

Special thanks to Sandy Kumar, Global Head of FSG and the expert panellists.

Hugely grateful to Emma Godfrey and Laura Baldock for organising a highly successful event.

• Darshita Gillies
• Parul Gupta
• Niresh Rajah
• Keith Davies
• Paul L Young (FCPA)
• Rashim Arora
• Sylvia Ashley
• Sonia Shah
• David Storm, CFA, CAIA

ESG Trends

• Wealth owners have allocated significantly to ESG products recently with a large asset manager attracting $4bn over the past 12 months.
• Wealth owners seek authenticity with ESG products and sustainability so mis-selling needs to be identified
• It is essential to ensure that NextGens remain engaged
• There needs to be a greater focus on the ’S’ of ESG, however ’S’ is harder to quantify
• There needs to be a framework for economies that do not fully embrace ESG principles and therefore could have a lower cost of doing business
• The importance of ESG within corporate governance is growing. For example, CEO’s will insist their Chief Sustainability Officer attend investor meeting

Data & Technology

• Wealth owners want to measure the direct impact of investments on their carbon footprint – technology platforms play a vital role
• There are no standard definitions for ESG reporting, unlike conventional financial metrics such as P/E ratios
• ESG data is currently backwards looking - it needs to look forward
• A greater consistency of ESG scoring is required coupled with data transparency
• It is essential to create an ESG book of record
• Wealth owners have their own value frameworks which are applied to ESG – technology platforms need to capture this
• Natural language processing including sentiment analysis is vital to help refine data sets

Risk Management / deadlines looming

• Increased scrutiny from all quarters imposes its own challenges
• There are a number of deadlines looming which financial institutions need to be aware of
• Saudi Arabia plans to issue a mega sized green bond - this illustrates the transition from brown to green by countries and sovereign wealth funds
• Many companies are issuing grand public disclosures, e.g net zero, which carries significant green washing risks
• Avoiding the green washing and reputational risk is vital to companies
• Industry needs capital leadership not just thought leadership
• ESG training across the board is key
• Although collaboration is good, we still operate in a competitive market where players are looking for the competitive edge