Clients expect more than just performance from their investments

More than ever before, clients expect more than just performance from their investments.

Wednesday 23 May 2018

Adrien Gagnebin

We have noted increasing requests for specific ethical screening as well as for the inclusion of environmental, social and governance (ESG) standards in our investment selection processes.

While discussing the subject with our clients, we established their need for ESG investments based on concern for future generations. Being entrepreneurs themselves, they recognise that they have benefited from an incredible age of growth in their respective businesses and realise that such growth ‘at all costs’ is not sustainable in the long run. Having adapted their way of working to this philosophy, it is time to focus on their personal investments as well.

During this process, we discovered that the integration of ESG standards not only creates a stronger client-adviser relationship, but also improves the risk management of the portfolio. Investing in companies with strong ESG standards increases downside protection (less environmental issues, lower idiosyncratic risk), while maximising the potential upside (sustainable growth models, increased investments in innovation). Subsequently, the overall risk-return profile of the client’s portfolio is improved.

Finally, thanks to increasing interest in such standards, sustainable investing is moving away from its previous reputation of simply being an alternative to philanthropy (giving up potential returns in exchange for meeting ESG criteria), become a specialised asset class with returns comparable to conventional peer investments.

Source : Citywire