Advisers need to “lean in” to conversations with clients about responsible and sustainable investments, says Bell Partners’ Wealth Creation and Financial Advisory founder and principal adviser Brett Taggart.
“Leave the question out there and the clients will answer it,’’ he advises in the Professional Planner Principles in Practice Podcast.
“I think it’s a situation where advisers will need to build up the courage to actually raise the topic… to ask the broad question: what are your thoughts around ESG [environmental, social and governance]? Is that something that’s important to you? Do you have any thoughts or comments around that? Is that something you’d like to have in your portfolio? Avoiding it’s not going to be a strategy, that’s for sure.’’
Taggart said the answer is usually varied with some clients not aware of the term, some clients are not interested, while others are well-informed.
Advisers have access to plenty of information and knowledge on ESG so they don’t have to “reinvent the wheel” with industry-based events with groups like BlackRock and State Street providing the research and data.
“They do it in a way that we don’t have to pick it up and work it out for ourselves. They’re very, very good at being able to frame an education piece around that to give you a really good understanding at a base level.”
Taggart said Bell Partners had partnered with Blackrock to help clients with ESG products because they needed to “push the agenda a little more quickly”.
BlackRock Australasia head of wealth Chantal Giles said the $US10 trillion ($15.4 trillion) asset manager had been an early UN Principals of Responsible Investment (PRI) company and had woven ESG goals into their investment products.
“Blackrock purposely uses the term sustainability as we think it will retain its meaning and relevance long after ESG goals have been achieved,” she said. “Investing with purpose is really looking at companies who are aligned to your values and your purpose.”
BlackRock viewed climate as an investment risk that would reshape the global economy, whether it was managed successfully or not, either through devastating costs or the transformation of energy production, supply chains and transport.
“We really hear through our global surveys, that climate risk is the number one concern consistently raised by clients all over the world,’’ Giles said. “Our focus on understanding kind of how the net zero transition is driven, is defined by our role as a fiduciary, but our clients are really asking us and holding us accountable to that now.”
Giles said advisers should look at ESG as a spectrum from “avoid to advance” which was consistent with global standards and offered choice to clients wishing to avoid investment in fossil fuels, nuclear and other things that violate their values as well as products that have more than measurable social and environmental outcomes that impact positively.
“Typically clients start their journey, thinking about all the things that they don’t want to own, so avoiding certain stocks and sectors,’’ she said. “As education continues, clients are really looking for things that are going to have a positive and measurable impact on things like social and environmental outcomes.”
