What does the top wealth manager think about ESG We wrap up what happened at last week’s Wealth Management Transformation Summit Session on ESG in London
Speakers: Jamie Forrester, Director, Asset & Wealth Management Consulting at Alpha FMC (moderator)
- Nikhil Chouguley is Chief Operating Officer – Sustainable Investing at Citi Global Wealth
- Garth Emrich, Delivery Lead, Change & Transformation at Rathbone Brothers
- Maria Costa, Sustainability and Innovation – Wealth Management and Insurance Santander UK
- Sam Tripuraneni Head of Sustainable Outcomes Aviva Investors
The megatrend of sustainable investing: The three main points of the panel discussion were discussed.
- The ESG investment boom is expected to continue. Green investing is here to stay and will become “more resilient over time,” according to Costa. She stressed the importance to balance the positive impact of socially responsible investments with maximising returns as the trend develops. Chouguley agreed and said he expects ESG investing to mature as the “Generational shift” in wealth management occurs. Emrich argued that you could take a more cynical view, saying “There is inertia amongst investors and within the industry but the [climate] science is completely clear.” The green investing trend will continue but the path is winding, he added.
- Regulation is improving but it’s not perfect. What the UK’s Financial Conduct Authority is doing “is exactly what’s needed,” Emrich believes. Self-regulation is important: It’s up to companies to earn ESG labels and have guardrails in place, he added. Tripuraneni disagreed, lamenting that, “Regulation is lagging what most forward-looking investors are doing.” He thinks this will stymie short-term innovation because products must meet labels, although he acknowledged that regulation must be gradual for long-term benefits. The “industry is still finding its feet” on oversight, Chouguley said, noting 12 separate regulations on Citi’s radar. He anticipates that legislation will stabilize, which will make it easier for financial institutions to educate clients and build products. Regulation is about being “pragmatic and honest,” he stressed, and advised, “Don’t claim sustainability and greenness if you can’t prove it.”
- ESG products are gaining a competitive edge. The trend is becoming the norm and so simply offering green investing won’t be enough in the long term, noted Costa, although she “definitely” views it as giving firms a short-term advantage. Chouguley stated that it provides a long-term competitive edge, but there are risks to being an industry leader because of the risk of being caught greenwashing, and being punished by watchdogs. Goldman SachsThis is what Tripuraneni has discovered. Tripuraneni explained that ESG funds can help asset managers differentiate themselves as they are available to everyone. Rathbone’s Emrich highlighted ESG investing’s wider value in attracting young talent.
