Executive summary The next step
Despite the surge in popularity of ESG investing , there is no such thing as the typical ESG investor . Catering to your clients ’ values and principles will require the integration of new sources of data into the fund-selection process , writes FE fundinfo ’ s Hamish Purdey
ESG AND SUSTAINABLE INVESTING has grown exponentially as the Covid-19 pandemic has accelerated the long-term shift towards responsible investment . Recent years have demonstrated that investing by ESG principles does not mean compromising on financial returns , while responsible investment strategies have steadily captured inflows – bucking the trend of investors pulling money from active funds . From being on the sidelines of the industry , ESG has moved firmly into the mainstream .
While this is one of the most important developments in today ’ s investment landscape , this strong growth has brought greater demands for ESG data and transparency . That ’ s why FE fundinfo has significantly enhanced its ESG offering over the past 18 months , including through the acquisition of consulting and research house CSSP and its stateof-the-art ESG reporting capabilities , such as the yourSRI . com platform ; an agreement to include MSCI ’ s ESG fund ratings across FE Analytics , Trustnet and fundinfo . com ; and the launch of our Eco-Label service to help fund managers certify their ESG credentials .
The 2021 FE fundinfo ESG Market Review pulls together our in-house expertise to create a unique snapshot of how the UK funds industry is rising to the demands of higher ESG standards . This analysis shows how the average fund sector stacks up for its ESG , impact and controversy exposure , offering a valuable yardstick for individual funds to be compared against and allowing investors to make better-informed decisions .
What can be seen , for example , is how some regions – such as the UK and Europe – are more plentiful hunting grounds for funds considered to be ESG ‘ leaders ’, while others , such as emerging markets , seem to be lacking in obvious opportunities . It is also clear how funds vary in their performance on the individual environmental , social and governance factors and how a strong ESG process doesn ’ t always mean managers avoid companies in morally controversial sectors . All of this underpins the need to carry out detailed fund research .
4 ESG Market Review Copyright FE fundinfo ( Liechtenstein ) 2021