Until the asset management industry can agree on some standard definitions and practices regarding sustainable investing, the onus will be on financial advisers to look behind the scenes and under the hood of any strategy marketed as incorporating ESG factors.The following are due diligence best practices and tips for avoiding “greenwashed” products.
• Request a meeting with the asset manager’s ESG team to understand their process and where they sit within the company.
• Find out if the firm has a formal commitment or mission statement regarding ESG investing.
• Find out if the firm has dedicated ESG-investment professionals, including portfolio managers and analysts.
• Ask about the firm’s ability to leverage ESG data and analytics in security analysis from a risk perspective.
• Ask about the firm’s policy and track record when it comes to shareholder proxy voting and engaging directly with company management and directors.
Additional practices regarding the data.
• Know the asset manager’s source of ESG data.
• Single-source third-party data is limited and can be stale.
• The next step would be an in-house team developing proprietary ESG assessments.
• The ideal scenario would be for the firm to have active engagement, collaborating dialogue with individual companies.
Examples of resources for screening funds.
• Morningstar.com: Using data from Sustainalytics, Morningstar’s globe rating system provides a historical sustainability score that includes metrics for carbon risk and fossil-fuel involvement. The globe ratings are updated monthly based on the latest portfolio reporting, and consider the trailing 12 months, while weighting recent portfolios more heavily.
• MSCI.com/ESG-ratings: MSCI is expanding its universe of funds that are screened and graded with ESG scores. The grading is on a seven-point scale and provides context as to specific ESG areas where the fund is strong, average and weak.
• FossilFreeFunds.org: Part of AsYouSow.org, this screening tool provides detailed analysis of a fund’s underlying holdings. In addition to a breakdown of fossil-fuel holdings, the site grades funds on factors including deforestation, gender equality, civilian firearms, military weapons and tobacco.
Salespeople at the firm often went beyond the matching algorithm to recommend network advisors on its Zoe Wealth platform, according to the regulator.
The Protect College Sports Act would cap school payments and codify NIL rights, with implications for advisors guiding young athletes.
"I know the number that I want to be able to retire on, and now I just want out," says Wilmington Trust's Marguerite Weese, describing a common refrain among business-owner clients.
Bessemer and Brown Brothers Harriman veteran Robert Ludricks III and private markets specialist Olof Akesson join the ultra-high-net-worth push on the East Coast.
765 investors were promised 260% annual returns on truck leases
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
