# Unstoppable ESG momentum puts investment manager reporting in the spotlight Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-11-03 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Sustainable Investing Forecast: $13 Trillion by 2025 Meta Description: Discover how the sustainable investing landscape is rapidly changing, with over $13 trillion projected by 2025. Stay ahead with best practices in ESG reporting. URL: https://financedigest.com/unstoppable-esg-momentum-puts-investment-manager-reporting-in-the-spotlighthtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/going-green-sbi-300189370-1736837479453-compressed.jpg) _![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/37-1736837479539-compressed.jpg)_ _By **Jacolene Otto,** Head of Private Equity and Real Estate,_ [_Maitland_](https://www.maitlandgroup.com/) - Dedicated sustainable investing assets are forecast to reach [$13 trillion globally by 2025](https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-its-not-easy-being-green.pdf), more than quadruple the $2.8 trillion total at year-end 2020, according to new research from asset management consultant Casey Quirk. - The Global Sustainable Investment Alliance (GSIA) says sustainable investment in major financial markets has grown 15% over the past two years and now [tops $35 trillion](http://www.gsi-alliance.org/wp-content/uploads/2021/07/GSIR-2020.pdf). - The Net Zero Asset Managers initiative indicates [almost half of the total funds managed globally](https://www.netzeroassetmanagers.org/)($43tn) are now committed to a net zero emissions target. The figures tell a dual story. First, of impressive growth. Investor demand, emerging regulatory disclosure requirements, and the launch and reclassification of environmental, social and governance (ESG) funds have fuelled a surge in ESG-focused asset allocations – a trend that shows no sign of slowing down. Second is the multitude of ESG-related definitions and designations that have sprouted up over time, and the wildly varying statistics about the industry’s [size and growth](https://www.financedigest.com/global-splined-sleeves-market-size-share-trend-growth-forecast-to-2031.html "Global Splined Sleeves Market Size, Share, Trend & Growth Forecast To 2031") that result. Given the industry’s current lack of ESG reporting standardisation, it is no wonder so many investment firms are struggling to report the true [value](https://www.financedigest.com/procurementin-european-private-equity-investment-adding-value-to-the-boardroom.html "Procurement in European private equity investment – adding value to the boardroom.") of their ESG-focused investments. For their part, investors must navigate a melange of metrics, rating systems and scorecards to determine the ESG value of a particular [fund or investment](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management"). To demonstrate best practice and stay ahead of regulator and investor demands, [investment managers must move](https://www.financedigest.com/anyone-can-write-assignment-need-people-able-apply-new-skills-workplace-says-top-investment-management-company.html "“Anyone can write an assignment, but we need people to be able to apply their new skills to the workplace,” says top investment management company") beyond ESG reporting as a tick-box exercise, and instead ensure it is aligned with their core investment strategy and business objectives. To achieve more effective ESG reporting, fund [managers will need](https://www.financedigest.com/struggling-banks-need-to-modernise-and-improve-software-quality-management.html "Struggling Banks Need to Modernise and Improve Software Quality Management") to take these five key steps: 1. **Understand key drivers** Understanding and responding to current market drivers [will enable firms to create](https://www.financedigest.com/aon-announces-agreement-to-acquire-risk-management-firm-creating-a-comprehensive-cyber-risk-management-advisory-group.html "Aon announces agreement to acquire risk management firm, creating a comprehensive cyber risk management advisory group") an ESG reporting strategy that meets the needs of existing and future clients. The Covid-19 [crisis has been a particular inflexion point](https://www.financedigest.com/explainer-credit-suisse-how-did-it-get-to-crisis-point.html "Explainer-Credit Suisse: How did it get to crisis point?"), with investors increasingly considering ESG factors in an attempt to address the issues exposed by the pandemic. As a result, we can expect to see the social component of [ESG move to the forefront](https://www.financedigest.com/occupational-health-and-safety-must-be-brought-back-to-the-forefront-of-esg.html "Occupational Health and Safety must be brought back to the forefront of ESG"). Climate concerns remain top-of-mind for many too. The release earlier this year of Netflix’s ‘SeaSpiracy’ docufilm, a raft of new country and corporate net zero commitments, plus COP26 in November [– when world leaders will gather in Glasgow to build on the landmark 2015 Paris meeting – suggest 2021 could be a turning point in the fight](https://www.financedigest.com/2016-the-fight-back-of-the-established-brand.html "2016 – THE FIGHT BACK OF THE ESTABLISHED BRAND") to tackle climate change. Gen-Z will also be a progressively important presence in [the business world and](https://www.financedigest.com/be-the-digital-eyes-and-ears-of-your-business-from-anywhere-in-the-world.html "Be the digital eyes and ears of your business – from anywhere in the world!") as wealth accumulators. [They will bring with them a different and more ESG focused set of values as both working professionals and future investors](https://www.financedigest.com/worlds-best-islands-bring-holidaymakers-and-investors-flocking-to-the-philippines.html "‘World’s best islands’ bring holidaymakers and investors flocking to the Philippines"). 2. **Be realistic** When identifying which metrics to report on, firms should start small and outline realistic, achievable goals. Over time, as capabilities and [experience improve](https://www.financedigest.com/improving-customer-experience-through-broadening-your-mobile-offering.html "Improving customer experience through broadening your mobile offering"), they can expand their objectives. Funds often have multiple stakeholders, each with different preferences. The trick is to identify metrics that are actually reportable and make sense for all parties involved. Avoid trying to do too much too soon. [Reporting on the impact](https://www.financedigest.com/uk-report-warns-of-impact-of-islamist-groups-in-prisons.html "UK report warns of impact of Islamist groups in prisons") of every area of a fund won’t work, so pick a couple of ESG metrics you can report on effectively, for example by using data inputs from underlying investment companies. 3. **Think about the story you want to tell, and tell it well** With new technologies, approaches and [players entering the market all](https://www.financedigest.com/automotive-hmi-system-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "Automotive HMI System Market: Recent Industry Developments and Growth Strategies Adopted by Players") the time, ESG-conscious investors will ultimately be swayed by the story behind the numbers, and how well that story is told. Demonstrating the [impact of ESG investments, and doing it in an engaging way, will be key to winning over this growing investor cohort](https://www.financedigest.com/explainer-what-is-the-s-in-esg-investing.html "Explainer-What is the ‘S’ in ESG investing?"). Striking the right balance between [qualitative information and quantitative metrics is essential](https://www.financedigest.com/information-is-essential.html "Information is Essential"). From mission statements to video content, the onus is on making the end-investor feel more [connected to the impact their investments](https://www.financedigest.com/how-state-of-the-art-networks-can-keep-investment-banks-connected-and-compliant.html "How state-of-the-art networks can keep investment banks connected and compliant") are having on the ground. 4. **Don’t neglect the ‘G’ in ESG** The ‘E’ and ‘S’ have garnered the lion’s share of attention in recent years, eclipsing the importance of the ‘G’ element. Yet without the correct processes, legislation and reporting in place to underpin environmental and social progress, firms will [struggle to grow at the pace of demand](https://www.financedigest.com/oil-struggles-to-hold-gains-amid-mixed-demand-view.html "Oil struggles to hold gains amid mixed demand view"). In a [post-pandemic environment](https://www.financedigest.com/retaining-insurance-customers-in-a-post-pandemic-environment.html "Retaining insurance customers in a post-pandemic environment"), effective governance will enable us to rebuild our economies and societies on stronger foundations. And it will help the [investment industry become](https://www.financedigest.com/volkswagen-to-invest-in-mines-in-bid-to-become-global-battery-supplier.html "Volkswagen to invest in mines in bid to become global battery supplier") more robust and sustainable. 5. **Align ESG** [reporting with your investment strategy](https://www.financedigest.com/2018-it-security-predictions-methods-for-attacks-investment-areas-cybersecurity-strategies.html "2018 IT Security Predictions-Methods For Attacks, Investment Areas & Cybersecurity Strategies") Generating [real impact as](https://www.financedigest.com/the-real-impact-of-psd2.html "The Real Impact of PSD2 ") a company stakeholder doesn’t happen overnight. In some cases, it could take up to five or ten years. Which is why tying ESG reporting [into firms’ overarching investment strategy will be critical for long-term success](https://www.financedigest.com/large-investment-success-for-basingstoke-cybersecurity-start-up.html "Large investment success for Basingstoke cybersecurity start-up"). Authenticity is crucial here. [Investment firms should base their ESG](https://www.financedigest.com/how-green-are-your-investments-why-esg-data-integration-is-key-for-financial-services-firms.html "“How green are your investments?” – Why ESG data integration is key for financial services firms") reporting strategy on what they are trying to achieve as a business, not what their competitors are doing. More than that, it has to be genuine – something the firm does because it wants to, not because of some legal obligation. ESG-oriented [investing is the way of the future](https://www.financedigest.com/investing-in-the-city-thats-investing-in-itself-welcome-to-the-liverpool-of-the-future.html "INVESTING IN THE CITY THAT’S INVESTING IN ITSELF – WELCOME TO THE LIVERPOOL OF THE FUTURE!  "). Getting ESG [reporting right will be vital in helping firms](https://www.financedigest.com/local-government-business-support-getting-worse-report-shows-as-70-of-uk-firms-say-its-not-good-enough.html "Local government business support getting worse, report shows, as 70% of UK firms say it’s not good enough") compete successfully in this changing environment. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---