Sustainable Investing – a Global View

Some of the Everlake team attended the PortfolioMetrix LEAD Symposium in Cape Town this May.

The event brought together some of the world’s top financial advisors to share ideas and challenge the norms in pursuit of a positive evolution of financial advice.

Here our PortfolioMetrix colleague, Kirsten de Wet, shares some key points that were raised during her panel discussion on Sustainable Investing at the event.

ESG Discussion Panel

I had the privilege of hosting a panel discussion at the PortfolioMetrix LEAD Symposium in May. The focus was broadly on the topic of ESG (Environmental, Social and Governance) investing and whether responsibility falls to the financial adviser to educate their clients on sustainable investing.

Global Perspective of Sustainable Investing

We were fortunate to gain a global perspective on the topic from Marc Westlake who joined the panel. The conversation was enlightening and sparked ongoing conversations amongst those who attended.

Different Jurisdictions

South Africa differs from Ireland in that our regulation doesn’t (yet) require financial advisers to ascertain a client’s interest in sustainable investing, nor do they need to include any kind of ESG mandate in the plans they build for their clients.

The regulatory framework in Europe, through the implementation of Sustainable Finance Disclosure Regulation (SFDR), is more developed when it comes to financial advice and incorporating ESG considerations.

Partly because of this, South Africa lags in the area of sustainable investing, and less clients are choosing to have their capital applied in support of the transition to a more sustainable world.

This begged the question whether clients are perhaps unaware that the option to have their money generate a financial return as well as positively impact society and the environment exists.

The Role of a Financial Advisor

There may be a misconception that investing sustainably means to potentially forgo investment returns. If a client were to invest with purely philanthropic intent, that would be the case. But there exists a broader spectrum of responsible investing which measures how ‘positively impactful’ a particular strategy is and combines this with what type of financial returns that strategy seeks.

Coupled with the myriad of terms and definitions surrounding sustainable investing, it has led to an at times confusing space for clients to navigate alone. At its core, sustainable investing is not a solitary endeavour – it is a collaborative effort.

A financial adviser can help clients to understand their investment options and how sustainability can be worked into their overall financial plan.