Female and millennial advisers driving ESG

Female financial advisers and millennial advisers in the US are driving the conversation around responsible investing and this is going to become more prominent in their client engagement in the future, according to an Eaton Vance affiliate.

The asset manager’s new affiliate, Calvert Research and Management, told a media briefing in Sydney on Monday that the adviser cohort that was driving this interest was reflecting the interest of their clients, which was also led by female and millennial clients.

Calvert director, responsible investment strategy, Anthony Eames, quoted Eaton Vance’s ‘Adviser Top-of-Mind Index’, which showed that at the last quarter at the end of last year, 21 per cent of the thousands of advisers surveyed in the US indicated responsible investing would comprise an important part of their client engagement in the future.

“We asked the same question again in this last quarter and it’s now up to 40 per cent. So the number of advisers who indicate that responsible investment is going to be important and a growing part of the business nearly doubled,” Eames said.

Eaton Vance director, institutional business, Duncan Hodnett said Australia mirrored this trend, with advisers and planners being compelled to initiate discussions around environmental, social and governance (ESG)-related issues with younger family members.

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“I think it really comes down to advisers thinking about how they’re going to retain a client relationship over the longer term and particularly in the high net worth space is intergenerational clients, and understanding that the second generation or the third generation or the next generation coming up are a lot more interested in these types of issues,” he said.

Eames said responsible investing had evolved in the last 10 to 15 years from an exclusionary approach to identifying companies that were managing their non-financial capital and their ESG risks in an effective manner to avoid the pitfalls that were felt by other companies that were not as attuned to those risks.

“If you talk to investors out there about responsible investment, there’s still this perception, increasingly a misperception that it’s about identifying companies that are not doing a good job or maybe identifying companies that are in the industry in the traditional sin stocks and simply avoiding those companies, sort of this negative screening approach,” Eames said.

However, companies that were positioning their businesses to effectively manage ESG risks were thriving, he said.