Environmental, social and governance (ESG) and impact investing were popular topics at this year’s Linedata conference in London.
It was noted in one panel that firms need to adapt as the world changes around them as the last few years have seen big changes for the industry in terms of investing ethically.
The panellists were asked whether companies would be able to invest if they did not comply with ESG, to which one panellist replied: “Our clients are large institutional clients, such as pension funds and we certainly have seen an increased demand for products that are ESG compliant.”
Another panellist said: “We have seen an increase in ESG appetite from pension funds. Interestingly, it has been an easier task for fund managers to comply with ESG and one of the reasons for this is the availability of software such as Linedata.”
In terms of the reasoning behind ESG compliant products, the moderator asked, “Is this an ethical reason for the demand of ESG compliant products?”
One speaker replied: “Yes, to an extent this was an ethical decision for many pension funds.”
Elaborating on this, another panellist explained: “It is a matter of ethical stance but gradually more investors are beginning to consider companies that apply with high ESG criteria, and that reflects the level of the risk the company may have—investors look at the risk as well.”
They added: “Some companies fully integrated ESG but the majority are still implementing it partially depending on the region and the type of sector. The shape will be different but we definitely see it transforming.”
Discussing ESG from an investor point of view, one panellist warned: “Demand from investors who have the pressures from regulators is increasing, and if you are a company who isn’t implementing ESG, it is best to be aware that somebody else will implement it—an investor will, therefore, choose them over you.”
Meanwhile, another panellist commented: “We see ESG as an essential component and there is research to show that ESG will score higher returns. I think we will see it become more mainstream and embraced by asset managers.”
The panel was then asked: “What do businesses need to deliver growth?”.
To this question, one panellist said:“Generally speaking it is a combination of the policy makers and the private businesses. In this day and age, there is an understanding from policy makers for this world to have a sustainable future.”
The panellist added: “More and more businesses are now pioneering ESG innovatives and are embracing them —it may be partially because of a trend, but it doesn’t really matter, as long as the underlying result is the same.”
Concluding the panel, one speaker said: “Momentum is growing and we are seeing very positive outcomes for companies who embark upon [the ESG] route. If you don’t embark upon this route other companies will and you will be excluded.”
