The inaugural meeting of The Senior Leaders ESG Forum was hosted by Objectway and Compeer and brought together a group of leading Wealth Management firms to discuss the opportunities and challenges associated with ESG investing. Participating firms were a broad and diverse representation of the Wealth Management Industry.

Although ESG was a high priority for all the firms, the forum highlighted that firms are at various stages of readiness ranging from beginning to form a strategy to implementing changes.

One of the key challenges identified was integrating ESG into the investment management framework and then monitoring this. For example, capturing ESG preferences for clients and then managing the risks effectively, such as rebalancing portfolios. Some of the firms had adopted manual workarounds but ideally were looking for a digital solution to integrate with their current set up.

The other main challenge was the need for common standards which are still not clear despite recent changes in MiFID II and SFDR. Also, the fact that there is a lack of standardisation in ESG related data, for example data providers use different scoring methodologies, means measuring ESG is a challenge and impacts effective reporting. This has also added to the trepidation around potential greenwashing.

Firms acknowledged that whilst client demand was important in bringing attention to ESG (6/10 clients would prefer a firm with an ESG offering) the regulation around it would ultimately drive their offering. To this end, firms were expecting to have to make changes in an agile fashion as the guidance and/or market consensus became clearer.

The Senior Leaders ESG Forum will continue to serve as a platform for Wealth Management firms to exchange ideas, shape thought leadership and help define industry best practise. Compeer and Objectway will host quarterly meetings with a research led focus covering ESG and other emerging relevant topics in further detail.