ESG investing is becoming an increasingly important part of financial planning, with almost two-thirds of financial advisers witnessing an increase in the amount of client money being invested into ESG/sustainable investments over the past year alone*.
However, assessing the ESG credentials of a fund is a clear challenge for financial advisers. Many are conducting their own research by using several different sources, and our recent adviser survey suggested the amount being invested sustainably could be higher if data availability was improved.
We are therefore delighted to introduce the first set of ESG Ratings into FE Analytics, designed to give you an indication of the ESG performance of funds, to support you in making an investment decision aligned with your clients’ objectives and values.
Provided by ISS, each fund will now receive its own rating, derived from a weighted average ESG performance score which evaluates issues across environmental, social and governance performance metrics. The overall rating is graded on a scale from 1-star (worst) to 5-stars (best), and can be viewed in FE Analytics in the following places:
- Portfolio Medium/Long Scan
- Fund Filter and Alert Manager
- Custom Filter/Custom Portfolio Report
- Investment Planner Portfolio Report
Please note, an ESG rating is provided to a fund which makes available the necessary information required to assign a rating. For more information about how ratings are assigned, please read the ISS ESG Fund Rating Methodology and Research Process document.
It is important to mention that this latest development is the first of several ESG Ratings we plan to introduce into FE Analytics over time. We want to provide financial advisers and paraplanners with a breadth of information on which to assess the ESG credentials of a fund, rather than simply relying on one particular rating.
We will also be releasing a Sustainable Investing Questionnaire later this summer, designed to facilitate a conversation and be used as part of your ‘know your client’ process. Furthermore, whilst the UK regulation is yet to be determined, selected data points from the EET Template will be added into FE Analytics to further aid fund research.
As always, if you have any thoughts or ideas for improvement, please don’t hesitate to let us know. And if you would like to find out more, please don't hesitate to get in touch.
This Autumn at our FE fundinfo Aligning Sustainability with Suitability Roadshow, we’ll be discussing how to talk to your clients about ESG as well as how it can be incorporated into your financial planning process. To find out more, please contact your account manager.