Investment professionals are concerned demand for the ESG sector may have overtaken the sector’s development as they say the area is becoming increasingly difficult to invest in despite the surge in popularity for ESG products.
Commentators have said the ESG [environmental, sustainable, governance] space lacks in reliable, comparable information, with a recent survey from Morgan Stanley finding out of 118 large asset management firms worldwide, only 42% indicated they had adequate tools to assess whether an ESG vehicle was appropriate for their client.
Closer to home, a survey of 204 UK advisers – commissioned by HSBC Global Asset Management – found only 13% of IFAs thought current ratings for ESG products were sufficient, while 57% would like to see more product ratings.
Daniel Rudd, head of UK wholesale at the firm, said client demand for the sector has increased, but the clarity of ratings and information available has not kept pace.
“Our research shows that there is a significant opportunity to better equip IFAs to inform their clients on ESG issues to help meet their investment objectives.”
Despite finding that a lack of information made ESG investing difficult, the Morgan Stanley research also reported that 84% of asset owners are pursuing or actively considering incorporating ESG into their investment process.