ALFI: Almost all client meetings have ESG on the agenda
05 October 2021 Luxembourg
Image: Pixels Hunter
The majority of client meetings have ESG on the agenda, affirmed Carlo Funk
Europe, Middle East, Africa head of ESG investment strategy at State Street Global Advisors, speaking at this year’s ALFI Digi Pulse US Virtual Conference.
Funk made the comments on a panel which discussed the importance and impact of sustainable investment in the fund industry and also the challenges that lay ahead.
Funk said that over the last few years, and particularly since the COVID-19 pandemic, there is more consideration surrounding environmental, social and governance (ESG) strategy in many client-facing meetings, with both asset managers and asset owners “actively thinking and navigating their business’ ESG initiatives” with this trend set to continue in earnest.
“It’s not all about product due diligence anymore”, Funk added. “ESG considerations are on the same par with risk management, they’re really making their way into the entire value chain and the DNA of both asset managers and asset owners.”
“The Luxembourg industry in particular is very well positioned for it — it is an important hub for ESG growth”, he added.
“We all know that ESG is no longer a niche area; interest has more than doubled in the last three years, with sustainable funds succeeding the amount of traditional funds for the first time in 2020”, said Anne-Gaëlle Delabye, partner and Ogier, the legal law firm headquartered in Jersey (Channel Islands). “What do asset managers perceive?” she asked Funk.
“ESG initiatives are making their way south to us asset managers”, Funk cited. “There are so many different reasons why investors pursue ESG strategies. For some, it is for the purpose of risk mitigation, while some believe it's an alpha driver for growth, among other reasons.”
“I doubt that globally we will ever come to an understanding or definitive agreement on what exactly an ‘ESG product’ should look like”, he added.
“The entire industry needs to learn more about ESG terminology. But I think that a lot of the international community are waiting for the regulators to step in and show them the way when it comes to ESG policy within their individual business.”
In the following session, Digitalisation: impacts on the investment process, Larissa Sototskaya, head of custody and fund services for Luxembourg at Citi securities services, touched on ESG prerogatives in Luxembourg.
She discussed the ethical questions that are being examined by investors when Luxembourg’s ESG initiatives have, on occasion, been interwoven with crypto mining.
“Luxembourg is a leader of European ESG investment, but the ‘energy unfriendly’ nature of crypto mining has raised questions in some board meetings. As a result, AIFMs and depos remain cautious around crypto and there is a spotlight on regulators to help to address this.”
Concluding more broadly on Luxembourg’s digital and sustainable offerings, Sototskaya commented: “Luxembourg has a lot to offer in space of both digital and ESG,” and told conference attendees to “watch out for [Luxembourg’s] future fintech developments”.
Europe, Middle East, Africa head of ESG investment strategy at State Street Global Advisors, speaking at this year’s ALFI Digi Pulse US Virtual Conference.
Funk made the comments on a panel which discussed the importance and impact of sustainable investment in the fund industry and also the challenges that lay ahead.
Funk said that over the last few years, and particularly since the COVID-19 pandemic, there is more consideration surrounding environmental, social and governance (ESG) strategy in many client-facing meetings, with both asset managers and asset owners “actively thinking and navigating their business’ ESG initiatives” with this trend set to continue in earnest.
“It’s not all about product due diligence anymore”, Funk added. “ESG considerations are on the same par with risk management, they’re really making their way into the entire value chain and the DNA of both asset managers and asset owners.”
“The Luxembourg industry in particular is very well positioned for it — it is an important hub for ESG growth”, he added.
“We all know that ESG is no longer a niche area; interest has more than doubled in the last three years, with sustainable funds succeeding the amount of traditional funds for the first time in 2020”, said Anne-Gaëlle Delabye, partner and Ogier, the legal law firm headquartered in Jersey (Channel Islands). “What do asset managers perceive?” she asked Funk.
“ESG initiatives are making their way south to us asset managers”, Funk cited. “There are so many different reasons why investors pursue ESG strategies. For some, it is for the purpose of risk mitigation, while some believe it's an alpha driver for growth, among other reasons.”
“I doubt that globally we will ever come to an understanding or definitive agreement on what exactly an ‘ESG product’ should look like”, he added.
“The entire industry needs to learn more about ESG terminology. But I think that a lot of the international community are waiting for the regulators to step in and show them the way when it comes to ESG policy within their individual business.”
In the following session, Digitalisation: impacts on the investment process, Larissa Sototskaya, head of custody and fund services for Luxembourg at Citi securities services, touched on ESG prerogatives in Luxembourg.
She discussed the ethical questions that are being examined by investors when Luxembourg’s ESG initiatives have, on occasion, been interwoven with crypto mining.
“Luxembourg is a leader of European ESG investment, but the ‘energy unfriendly’ nature of crypto mining has raised questions in some board meetings. As a result, AIFMs and depos remain cautious around crypto and there is a spotlight on regulators to help to address this.”
Concluding more broadly on Luxembourg’s digital and sustainable offerings, Sototskaya commented: “Luxembourg has a lot to offer in space of both digital and ESG,” and told conference attendees to “watch out for [Luxembourg’s] future fintech developments”.
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