The Wealth Mosaic Report: The Rise of ESG in Wealth Management

The consideration of Environmental, Social, and Governance (‘ESG’) issues is not new for wealth managers; however, in recent years, it has moved from being a peripheral concern to being a critical component of investment decision-making. The shift in attitude has been caused by a wide range of factors, such as the increasing awareness of climate change, the apparent benefits strong corporate responsibility has on company performance, as well as the realization that the next generation of investors take these issues very seriously and therefore wealth managers must respond to remain relevant. 

Wealth Mosaic Report, ESG, ESG Investing, Wealth Management

The headline figures of investment in ESG are impressive, with current claims in the market that over $40 trillion has already been committed into funds and companies in this area, and projections state that this could reach $140 trillion globally by 2025. However, as you will read in our foreword by Robert Rubinstein, all is not as it seems. This is highlighted by the increasing concern of ‘greenwashing’ due to ambiguous definitions of ESG, with companies included in ESG portfolios that are deemed by some not to meet valid ESG criteria. One could argue that wealth managers are doing the best they can with the tools they have at their disposal; however, it is clear that there is considerable room for improvement. And this is where technology comes in.

In this report, The Wealth Mosaic has gained insights from technology and data vendors that are focused on helping wealth managers in a wide range of ways in this area; from client suitability tests, incorporating ESG into portfolio construction, ESG reporting, news and analytics, and sourcing reliable ESG data to make investment decisions against. It is therefore clear that although there remains a lot more to do to improve ESG investing, there is real momentum from all participants, and technology has a crucial role to play in making things better.

The Wealth Mosaic would like to thank Robert Rubinstein for his insights, and the contributors from the nine technology vendors from across the globe that participated in the report: aixigo (Germany), BITA Risk (UK), Etops (Switzerland), InvestCloud (US), New Access (Switzerland), Objectway (Italy), OWL Analytics (US), Refinitiv (UK), and SwissQuant (Switzerland).