Understanding the key drivers impacting ESG investments across investor segments

Summary

Objectives

The client also wanted to:

• Understand key financial factors including market volatility, EBITDA, returns
• Understand non-financial factors and their importance, including ESG scores, regulations, brand reputation
• Determine key challenges involved in ESG investing
• Identify the best strategies and products to start ESG investing
• Master the importance of alternative investments (passive and active) to access ESG strategies
• Measure ESG gains in the short-term vs the long-term
• Find ways to educate investors about the long-term benefits of ESG investing

Why Phronesis?

• Subject matter experts familiar with financial service providers’ approach to investment
• A strong expert network across different investor target audiences including UHNWIs (Ultra-High-Net-Worth Individuals), and expertise in reaching out to them
• An understanding of their challenges and pain points, and the ability to deliver appropriate solutions and methodology

Our Approach

• Wealth Management
• Institutional Investment
• High-Net-Worth Individuals

We then recommended a series of ESG-focused questions to help the client gather the insights they needed, incorporating them into the final questionnaire, which was used as the basis of the in-depth interviews with targeted individuals.

Results

• Younger generations place a higher emphasis on ESG investing
• Although there are few product offerings in ESG, demand is increasing as a result of news and articles promoting the benefits of ESG investing
• Non-financial factors are as important as financial factors when making investment decisions
• Most investors are dissatisfied with their ESG investment returns, but they are positive that these will increase as the focus is likely to shift towards ESG in the near future
• Interest in sustainable investing is growing, but it is not a priority for many investors at this stage

How we helped the client

The findings helped the client understand how best to prioritize both financial and non-financial factors in order to identify the best possible products and strategies for their approach to ESG investment. For example, ESG scores and board governance were two factors the client could incorporate into their planning processes.

Based on our research, the client was also able to make changes to their wealth managers’ training and workshops to better educate them on the benefits of sustainable investing, and how they can sell more ESG-related financial products to the different investor segments.