With over 15 years’ experience working in partnership with a multi-trust family structure investing in environmental, social and governance (ESG) initiatives, Saffery Trust Manager Claire Tersigni shares her perspective on sustainability within the wealth industry.
Is sustainability an important consideration for the wealth industry?
Sustainability is crucial for service providers in their operations, for clients aiming to make a positive impact with their wealth, and for preserving the environment and wellbeing of present and future generations.
Achieving the 17 global Sustainable Development Goals is estimated to cost over US$40 trillion globally by 2030 , emphasising the need for sustainable investment. As private capital grows, high-net-worth individuals and families will play a key role in advancing global sustainability initiatives.
Wealth service providers should support clients in making sustainable investments while also achieving financial returns. This requires ongoing education, collaboration with specialist advisors, and identifying opportunities aligned with clients’ goals. Additionally, the rising costs of non-sustainable practices, such as increased loan and insurance expenses, highlight a push against unsustainable investments.
By supporting sustainable investments and acting responsibly as a business, we contribute to a better future and uphold commitments like the Paris Climate Agreement from COP21.
How have attitudes towards ESG changed?
One of the most notable changes in the ESG sector is the shift from viewing ESG strategies merely as risk mitigation to recognising the growth opportunities they present, ethically and financially. A recent study[1] found that 99% of family offices across 25 jurisdictions agreed that ESG principles are a key consideration for investment priorities, and 80% saw it as their duty.
Initially, investors focused primarily on avoiding negative impacts associated with ESG issues like environmental disasters or poor corporate governance, often excluding potentially controversial industries such as tobacco
Now, there’s a growing trend towards actively seeking to capitalise on the positive aspects of ESG initiatives. This includes investing in companies that lead in sustainability, innovation, and social responsibility, as these companies are increasingly seen as well-positioned for long-term success and resilience in a changing global landscape.
This shift is underscored by the strong performance of ESG funds and exchange-traded funds (ETFs) which matched or surpassed that of traditional funds and ETFs in 2023. Investors are showing a continued interest in the ESG sphere, with USD11bn invested in sustainable funds in Europe between January and March 2024.
What is driving ESG investment?
The drivers behind ESG investment are multifaceted and often specific to each investor. Key factors include heightened awareness of climate change, a globally conscious population focused on social and environmental issues, and the potential for strong financial returns. One significant appeal is the resilience of ESG-focused companies, which tend to navigate a broad range of challenges, such as inflation, geopolitical tensions, and supply chain disruptions, while still delivering solid returns.
Industries like decarbonisation, supported by government commitments, present long-term growth opportunities, making ESG-focused companies attractive to investors. However, the complexity of integrating ESG factors into portfolios can be daunting. Here, trustees can play a key role. While they are not investment advisors, trustees collaborate with professional intermediaries who have expertise in ESG trends and regulatory frameworks, helping clients make informed decisions.
What is the biggest challenge for clients relating to ESG and sustainability?
While we’ve all heard of “greenwashing,” – where companies exaggerate or falsify their green credentials – awareness of the issue does not always translate to knowing how to address it. Early in our ESG investment journey, we noticed that some organisations treated sustainability as a mere checkbox, or opportunity to create a ‘product’, rather than a genuine commitment. We prioritised identifying firms that genuinely share our and our clients’ values and ethos in sustainability and reflect ESG principles in their governance.
This careful selection process required significant time and resources. Clients managing ESG investments on their own may find it challenging, highlighting the value of appointing trusted advisors, like trustees, to manage these complexities. As interest in sustainable investments grows, so does the risk of greenwashing. Through a deep understanding of the ESG sector, thorough due diligence, and understanding regulations, service providers can help mitigate these risks for clients.
What is the biggest opportunity for clients relating to ESG and sustainability?
It may be hard to imagine now, but when we started exploring ESG options for a socially conscious client nearly two decades ago, it was a relatively unknown sector, and opportunities were few and far between. Today, the opportunities for clients are seemingly limitless as the sector continues to evolve.
With the global green technology and sustainability market expected to grow from US$20bn in 2024 to US$90bn by 2032, companies that excel in ESG metrics are often better positioned to capitalise on emerging market opportunities and interest from sustainably conscious investors.
Alongside the promising financial prospects for clients, is the opportunity to see the real-world impact of our investments. Examples of investments we have seen in the UK impact sector have contributed to positive social and environmental impacts including the resale of unsold books to save them from landfill, healthy school meals being provided to school children and an initiative to make social housing more eco-friendly.
As an independent firm, we have the freedom to explore any area of interest for our clients taking many factors into consideration, including risk. By understanding our clients’ values, and translating those into investments, we support our clients to explore any opportunity that aligns with their goals.
What do you enjoy most about working with clients in this sector?
My personal values align closely with the ideals of ESG and sustainability, and I feel fortunate that I share this outlook with many of our clients.
Working with individuals who are equally passionate about making a positive impact allows me to not only contribute to meaningful projects but also continuously learn and grow. It’s inspiring to collaborate with clients who are committed to creating lasting change and I am proud of the value that I, and the rest of the Saffery Trust team, can make in supporting clients to achieve their goals.
[1] Ocorian 2024 Global Family Office Report
