ESG investment experts have highlighted the need for better ESG data quality and clearer definitions and taxonomies about what constitute ESG products.
Speaking to Private Banker International (PBI), RBC Wealth Management’s product specialist, Eleni Karadimitri, told PBI that current ESG data is insufficient to accurately measure an investment’s sustainability exposure and impact at a time when clients are interested in understanding more about their investments.
She said: “We have a number of initiatives underway across the bank to address these issues, such as creating our own ESG scores on various funds based primarily on qualitative factors.”
Karadimitri stressed that banks and wealth managers need to start conducting deeper research of the various ESG implementation ideas and initiatives
Globalance Bank was not satisfied with existing ESG offerings, so it has decided to develop its own methodology, combining exclusions, sustainable investing and theme-based investing with testing of the ‘future fitness’ of all its investments in all asset classes.
Peter Zollinger, the bank’s head of impact research, told PBI: “To illustrate this, we are less interested in the operational ESG data of Volkswagen than systematically analysing the overall impact of its products during their lives on our roads.”
Clients are looking for a contemporary investment approach which gives equal weight to risk, return and impact, he adds. “They understand the interdependence between these criteria and invest in portfolios that are global, long term and highly diversified. A precondition to achieving this is transparency and a business model free from conflicts of interests.”
Eugenia Koh, head of impact investing and strategic engagements, private banking & wealth management at Standard Chartered Bank, referred to rising interest among investors, but also a lack of understanding on what sustainable investing entails and how its benefits go beyond the feel good factor.
Subscribers can read the full ESG feature in the May issue of Private Banker International.
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