Deutsche Wealth Management Pumps Up ESG Strategy

Jackie Bennion

17 September 2019

Announcing plans to beef up ESG capacity on several fronts, said yesterday that it is responding to increasing numbers of wealthy clients asking advisors how they can build more purpose into their investments. “This fast-growing area is of critical relevance for our clients and for the future of our business and society,” Deutsche WM global head Fabrizio Campelli, said.

Chief among these efforts, Deutsche's wealth arm, which manages around €200 billion (£177 billion) for clients, said it has adopted the ESG ratings of market leader MSCI to help standardise investment information for clients. It is also broadening ESG products across its discretionary wealth management and investment advisory businesses. and putting resources into new research, client materials, and events to address demand.

This thrust responds to the fact that “ESG analysis, guidance and investments are rapidly becoming not just an important component of our client offering but the essential foundation for everything we do,” Campelli said.

The size of the ESG investment market varies depending on where you look. Investment firms signed up to the PRI (the United Nations Principles for Responsible Investment), for example, account for around $80 trillion in global assets managed. This is often used as a representative figure by ESG proponents keen to show the exponential growth of the sector. The UN set up the programme in 2006 to monitor environmental, social and governance best practices in the financial sector, but its voluntary nature has attracted criticism as an easy way for asset managers to burnish their ESG credentials. To see a feature about trends in the ESG space, click here.

An audit last year showed that 10 per cent of around 2,000 signatories were put on a watchlist for failing to show a serious commitment to the principles. Some view the programme as lacking teeth to name and punish laggards.

The Global Sustainable Investment Alliance, a group tracking ESG investment among its members, puts the market size at around $30 trillion in assets managed.