The Different ESG Needs of Wealth and Asset Managers

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    Stockholm (NordSIP) – According to a recent report by SIX Group, asset managers and wealth managers have different ESG integration needs, with the first wanting better detailed background data while the latter are happy to just get ESG ratings. However, both groups would like to have better automated regulatory risk management solutions

    41% of 143 global buy-side C-suite executives surveyed agreed that the development of ESG-related capabilities was either important or critical to the way that they ran their business. This contrasted with 15% of them who did not recognize it as an important area.

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    However, executives agreed that there are clear data and technology challenges undermining ESG integration into their investment processes. Asset managers identified raw/underlying ESG datasets to help them assess the ESG credentials of particular investments themselves as the most common gap in the market. Apparently, the same problem is not present regarding ESG ratings, which can vary wildly from provider to provider and seem to be less interesting to sophisticated asset managers.

    Wealth managers, on the other hand, took a different stance, with 45% of them happy with fundamental, prepackaged ESG ratings. According to SIX Group, a lack of data expertise from wealth managers and the subsequent limited amount of analysis that they can do could explain why they prefer fundamental ESG ratings to raw ESG datasets.

    “Different market participants have different needs when it comes to ESG data. What they have in common is a need for standardized, reliable, comprehensive and accessible data. SIX understands the drivers of these different needs, and offers appropriate services to support them,” Marion Leslie, Head Financial Information and Member of the Executive Board of SIX said.

    Nevertheless, both asset and wealth managers broadly agreed that there is a lack of adequate technological capabilities in dealing with ESG investments, with over a third of respondents from both groups citing this as a main challenge. Additionally, over 40% of buy-side respondents wanted greater support with automated regulatory risk management solutions tailored for ESG reporting.

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