Banking

Editor’s letter: Why time is of the essence this Good Money Week

Now in its 16th year, the industry has experienced an entire sea change since its inception, shifting from begrudgingly ‘missing out’ on dividend yields from oil and gas giants, to embracing impact investing, committing to net-zero targets and joining numerous initiatives encouraging responsible investing.

Good Money Week takes on a new level of poignancy this year, given it falls just weeks away from COP26 – which has been dubbed by many as “the world’s last best chance” to start getting climate change under control. Readers can find out what three key industry members are expecting ahead of the conference on page six of this week’s magazine. 

The asset management sector has certainly started taking significant steps towards becoming more sustainable. Just year to date, we have seen Sustainable Finance Disclosure Regulation come into effect, capital in ESG funds surpass the $2trn mark according to Morningstar data, and Schroders become the first major UK asset management firm to commit to including sustainability data at a fund level on its assessment of value report. 

There are endless studies detailing an uptick in demand for ESG funds, with the world becoming increasingly aware of the fact we are running out of time to make a difference, and how we invest our money has a significant impact on the world if considered in aggregate.

But while demand and supply are both moving in the right direction, it is our responsibility to pick through the data and find the gaps as a means of bettering ourselves. 

For example, Schroders’ latest Global Investor Study, released last Thursday (30 September), found that 57% of investors are positive on the prospect of moving to a sustainable portfolio – assuming the same level of risk and diversification. But the question remains as to why 37% would only be ‘neutral’ at the prospect, while 6% of participants would see this as a negative. 

Similarly, while it found that “most people” would withdraw their money from investments in the event of a major scandal, 40% would stay invested in a company if it became embroiled in a climate change catastrophe.

Perhaps focusing on the minority percentages appears ‘glass half empty’, but given that time is very much of the essence, these are the figures we need to dig deeper into.

The reasons are likely multi-faceted. A recent survey from Boring Money found that two-thirds of advisers are reticent to put clients’ money into ESG products, given the potential fallout of recommending a fund that is not as green as it perhaps first appeared. 

The industry’s attitude has changed drastically over a very short period of time and an increasing number of people are sitting up and taking notice. The next step is to put the regulation and the infrastructure in place to make sure investors’ capital truly aligns with their beliefs. 

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