Defaqto will review ESG funds and DFMs for their ESG policy and how well the fund/portfolio aligns to it, product involvement in controversial areas, ESG integration, adherence to the UN SDGs, the asset management firm’s voting and engagement policies with corporates on ESG, and the company resources in terms of ESG behind the fund.
Pan Andreas, head of insight and consulting (funds and DFM) at Defaqto, said: “ESG investing involves searching out and including companies based on desired ESG characteristics rather than the traditional ethical approach which worked on an exclusionary basis, removing firms with undesirable business activities. The new approach involves a systematic consideration of specified ESG issues throughout the entire investment process.
“With regulatory changes requiring advisers to take ESG principles into account as a part of their suitability assessment, there need to be tools that make this easier. That’s why we’ve created these ESG Reviews. The adviser has another tool at their disposal to help reduce the time it takes to collate this information and the providers have a uniform way of presenting the information. Defaqto ESG Reviews are an extension of our broader Fund Reviews and are just the start of things to come in terms of the tools we’ll make available to advisers in this area.”