PLANADVISER - January/February 2018 - 14

trendspotting
Advisers
Expect
Increased
Demand
In ESG
Already, 18% offer socially
conscious funds in their
practice
MORE than
one-third-35%-of
asset managers have made introducing
environmental, social and
governance (ESG) investing a high
priority, and another 57% say they are
placing a moderate level of priority on
the task.
Together, this makes for a full 92%
of asset managers on the path to or
considering
offering
ESG
investing
options, says the December 2017 issue
of " The Cerulli Edge - U.S. Edition. "
Asset managers are making this
move because they believe the demand
for ESG investing will expand beyond
institutional investors-traditionally
apt to be religious-affiliated institutions
or nonprofits-to include more retail
Investment Managers
Thinking 'Green'
35%
Have made
ESG a high
priority
57%
Say ESG is a
moderate
priority
Source: The Cerulli Edge - U.S. Edition, Dec. 2017
investors. Already, 18% of advisers have
incorporated ESG into their practice,
and another 24% expect increased ESG
demand over the next 12 months.
Cerulli also expects other
institutional
investors, including public
defined benefit (DB) plans, endowments,
foundations and health care
institutions, to embrace ESG investing.
beginning
" Investors'
that
interest
incorporate
is
to shift from simply excluding 'sin'
stocks to seeking investment strategies
ESG
criteria
through integration, best-in-class/positive
screening, or impact investing,
among other methods, " says Brendan
Powers, senior analyst at Cerulli. " As
ESG strategies are gaining traction in
the institutional space, consultants are
recognizing this burgeoning demand.
Adoption of ESG strategies has largely
been concentrated among institutional
asset owners, but retail demand is
expected to grow as next-generation
investors seek to align their portfolios
with their personal values. "
Some asset managers are integrating
ESG screens into all of their
products, while others simply make
ESG analysts available to portfolio
managers, Cerulli reports.
Among advisers, multi-family
offices have been leading the ESG
movement, with 33% making use of
this type of investing and planning
to increase their allocations. An additional
17% plan to start using ESG in
the next 12 months.
A further potential catalyst, Cerulli
says, is Millennial high-net-worth
investors. It learned that many broker/
dealer (B/D) home offices are ramping
up the ESG capabilities on their platforms
due to demand from younger
investors. " With the increased availability
of data from providers such
as MSCI,
Sustainalytics and the Sustainable
Accounting Standards Board, among
numerous others, managers believe
that ESG integration will be the baseline
of how portfolios are constructed
going forward, " Cerulli says.
Even when confronted by so much
interest, many advisers still need to be
educated about ESG, as many think it
necessarily drags down performance.
-Lee Barney
Bloomberg, Morningstar/
14 | planadviser.com january-february 2018
Art by Alex Eben Meyer
http://www.planadviser.com
PLANADVISER - January/February 2018

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