Berenberg study shows social factors gaining traction post pandemic

Social factors in the environment, social and governance (ESG) complex have gained traction with 47% ranking them as more significant post-pandemic, according to a new survey by Berenberg WAM, the Wealth and Asset Management arm of Berenberg private bank.

Environmental factors were rated as important by 37% while only 18% choose governance.

The survey, which polled 112 members of the asset management community mainly in the US and Germany, assessed attitudes to ESG/impact-related topics and the UN Sustainable Development Goals (SDGs).

The study attributed the changing attitudes to increased scrutiny into how companies – and governments – have dealt with the impact of countries’ lockdown and economic recession on their staff, suppliers, customers, and communities.

The report found that Covid-19 had thrown existing inequalities into greater focus, triggering a call for action to address them.

In addition, respondents felt that companies should focus more on changes to working practices and employee wellbeing in the wake of the pandemic.

In terms of future trends, 19% expected that actively managed strategies would be the most relevant ESG product in the next five years while 17% choose impact investments and 15% targeted sustainability/SDG-linked bonds.

ESG backed passive vehicles were way down the list with only 6% viewing it as the most important product in five years’ time.

Views were more mixed on the use of third-party data providers to measure the ESG impact of their investments.

Only 12% found these firms ‘very helpful’, although 47% thought they were ‘somewhat helpful’, and 10% said they were not helpful at all.

Some written responses showed investors, while not dismissing third party impact data providers, were concerned that their metrics at times lacked sufficient consistency or access to relevant data.

“We are seeing a substantive increase of interest by investors across the E, S and G spectrum,” said Richard Brass, Berenberg’s Head of Wealth and Asset Management in the UK. The pandemic has resulted in companies, and more broadly governments, being judged on how they treat individuals and employees, especially in areas and sectors hard hit by lockdown measures, and how they adapt for different working practices.”

He added, “Investors are recognising the importance of actively managed ESG strategies as a contributor to change. Equally being able to assess use of invested money and funds’ efforts to support ESG factors will only become more important. Sentiment shows that there is more work to do amongst impact data providers to enable transparent and comparable statistics.”

©Markets Media Europe 2021

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