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ESG Product Workshop: How to avoid ESG greenwashing and minimise reputational risk when creating or assessing ESG products

Attendees at IMpower Incorporating FundForum gathered on the first day of sessions to participate in a multi-part workshop focused on ESG, greenwashing and products.


Part one

Workshop moderation and introduction – Making sense of what’s recommended, mandated and increasingly expected across the US, Europe and the UK

The asset management industry is great at rolling out new and innovative ESG products, but are they really listening to investors before products reach the design stage?

AJ Harper, Euroclear’s Head of Sustainable Finance, ETFs and asset managers, introduced a panel discussion at IMpower FundForum 2022 about what investors really want when it comes to ESG, and the challenge of designing ESG products that meet those needs.

He asked Marina Corghenci, Global Head of Funds Relations at Euroclear company MFEX, what ESG means for her asset manager and distributor clients. They agreed data - and the quality and consistency of that data - is crucial. Asset managers use data to defend the ESG component of their products when they take them to market, and to measure the impact they are having.

But how can asset manager ensure the ESG data they are using to screen securities, for instance, is reliable? “The key is taking the information from multiple sources and being sure this data is giving meaningful metrics,” said Corghenci. “That’s where asset managers today are really struggling and they need some external help from consultants that can help them in collecting this data and knowing that it is reported in the correct format.”

Regulatory requirements are also a persistent challenge – Harper said one analyst recalled the day a 600-page regulatory document landed on his desk, containing 2,500 data points to which every fund had to comply.

“The phrase I heard from one asset manager is that people are looking for a compass through the maze.”


Part two

Sustainable suitability – What do investors actually want? Understanding behavioural preferences for ESG, and how to turn these into portfolio solutions

How can asset managers best understand investor demand for ESG investment products, especially when values-driven investing is so personal and subjective?

How can asset managers best understand investor demand for ESG investment products, especially when values-driven investing is so personal and subjective?

Moderator Dr Greg B Davies, head of behavioural science at Oxford Risk, told a packed room of delegates that demand for ESG products has yet to be fully realised. “There is substantial demand from investors to align their investments to their values and to want to do good with their wealth. But that demand is still largely untapped,” he said.

Demand tends to be driven by attitudes, not demographics, and of course investors are all different, so the key to meeting their needs is better customisation and personalisation of both investment solutions and communications, Davies suggested.

He outlined four dimensions of attitudes towards ESG investment products...


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