Ortec Finance: Industry lacks tools providing insight into ESG & climate risks

Ortec Finance: Industry lacks tools providing insight into ESG & climate risks

20 juni 2024

Klimaatverandering Risicomanagement ESG
Duurzaam (24) ESG

New global research from Ortec Finance shows that clients are increasingly focusing on the ESG credentials of their investment portfolios. But many wealth managers and financial advisors do not have the tools and systems needed to effectively track and manage ESG and climate risks and the industry needs to invest heavily to improve.

Around 90% questioned in the study with wealth managers and financial advisors whose organizations collectively manage approximately £1.207 trillion said they are seeing more clients focusing on the ESG credentials of their investment portfolios, with 12% reporting a dramatic increase.

This is set to increase further still, with almost nine in ten (85%) agreeing that the focus from clients on the ESG credentials of their investment portfolios will increase over the next 24 months. Only 14% believe this focus will stay the same over the next 24 months as it is today.

Nine in ten (93%) of those surveyed say they are seeing more clients who want to avoid funds and stocks that invest in companies and sectors that are harming the environment or contributing to climate change. Around eight in ten (83%) of those surveyed say they are seeing more clients focusing on the climate risk their investment portfolios are potentially exposed to, with 38% of these saying they are seeing a dramatic increase.

However, despite the client focus on the ESG elements of their portfolio, only 1% of those surveyed say they have ‘very effective’ systems and tools to review the ESG or climate risk of clients’ funds, stocks or portfolios. A further 71% say their tools and systems are ‘quite effective’ and over one in four (27%) only rate their tools and systems to review and monitor ESG and climate risk for clients as ‘average’.

Overwhelmingly, more than nine out of 10 (94%) of those surveyed agree that the wealth and portfolio management industry needs to invest heavily in new technology and systems to help improve their understanding of the ESG and climate risk factors posed to the investment portfolios of their clients, as well as to funds and stocks in general.

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