PIMFA
Environmental, sociaL and governance
Environmental, Social, Governance (ESG) is a series of principles which put environmental, social and governance considerations at the centre of the investment decision-making process and help achieve more sustainable economy.
ESG investing has been gaining momentum ever since the United Nations Environment Programme Finance Initiative and the UN Global Compact, launched the Principles for Responsible Investments (PRI) in 2006 – a set guidelines for the incorporation of ESG factors into business policy and strategy and allowing investors to better align their objectives with those of society at large. Investors increasingly expect companies they invest in to take steps in the transition towards net zero, to demonstrate that their governance is based on industry best practice and that they care about their employees as well as the community in which their business operates.
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esg landscape
- Developing at fast pace as governments and regulators introduce policies and regulation that support transition to low carbon economy.
- Investors are seeking to achieve financial returns that reflect their values and benefit the environment and societies.
- The workplace is becoming more digital and diverse and calling for a rethink of the approach to leadership, organisational structures and talent.
- Efforts across the sector are needed to create processes and tools that can develop and sustain value creation over time.
- Coordinating our commitments across jurisdictions is the only way to effect a change – international standards are key.
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what is pimfa doing about esg?
- PIMFA were the first to set up an ESG Academy. Take this free online course now
- PIMFA has established and runs the Sustainable Finance Working Group that is committed to further the goals of ESG.
- PIMFA have created some papers on thought leadership in this are and are busy working on new papers that are coming out soon.
- PIMFA regularly updates the industry via our communications about important issues regarding ESG.
- PIMFA's Under 40 Leadership Committee recently produced a compelling report which focused mainly on using ESG to stimulate a wider culture of savings and investments.
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THE WEALTH MANAGEMENT SECTOR HAS A ROLE TO PLAY
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RETAIL INVESTORS AND ESG INVESTING – ESSENTIALS FOR SUCCESS
- Consumer tested, clear regulatory framework and regulatory signposting.
- Proportionality of regulation – friendly frameworks and targets for smaller firms.
- Consistency, transparency, clarity and simplicity in communications.
- Consistent and clear sustainability reporting.
- Standardized terminology underpinned by a stable classification or taxonomy.
- ESG products widely and easily available.
- ESG suitability requirements consistent and easy to integrate with existing requirements.
- Greater standardization across ESG data providers.
- ESG-compliant governance framework.
- International harmonization of standards.
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REGULATORY CHANGE IMPACT
- Firms’ preparedness for implementing changes
- returns firms can make for customers
- meeting suitability requirements
- understanding target markets
- understanding the investment allocations and the portfolio balances
- fitting products to customers under appropriateness tests
