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Overview
In our 2020 Asset and wealth management revolution paper, The Power to shape the future, we examined how the US$127 trillion industry was in an ideal position to tackle inequality and drive the green transition. Since then, we've seen an unprecedented acceleration in the move towards environmental, social and governance–orientated (ESG-orientated) investments. As investor allocations to ESG funds increase, the industry now has an opportunity to be at the forefront of a burgeoning ESG revolution.
The ESG imperative
In this report, we highlight the results of a recent PwC global survey of asset managers and institutional investors. Our findings reveal an AWM industry in transition. For asset managers, our analysis of ten market-defining trends stresses the urgency of moving away from ESG-orientated investments and, instead, integrating ESG principles into the heart of their purpose, strategy and investment management processes.
We analyse evolving industry priorities and new stakeholder expectations, identifying ten market-defining trends that are shaping the ESG agenda in the AWM market. Based upon the survey findings, our wide-ranging work with AWM organisations and insights from our community of solvers, these trends show investor expectations of ESG have set the scene for a radical overhaul of how value is defined and delivered within the AWM industry.
Ten ways ESG is shaping the future
- ESG is replacing asset price increases as an engine of growth.
- Pursuing ESG is fundamental.
- The investible universe for ESG funds will open up.
- ESG has broadened objectives and fiduciary duties.
- Investors are pushing for new ESG products—but demand outstrips supply.
- To attract new investment, managers need to differentiate their products and demonstrate ESG performance.
- Investors say they want more regulation.
- A meaningful ESG strategy requires investment.
- E, S and G must be balanced as part of a just transition.
- Managers need a proactive risk-mitigation strategy for mislabelled products.
Adapting your business to ESG
The sharpened focus on actively supporting green transition will create opportunities for new and creative strategies. We offer four levers to help your organisation get up to speed:
- Step up strategic integration.
- Reconfigure your operating model.
- Develop and convey a compelling story.
- Focus on the G, as well as the E and the S.
Are you ESG-ready?
As you look to increase insight, strengthen governance, and deliver demonstrable value to keep pace with investor expectations, it’s also important to build ESG into your digital and workforce transformation. How quickly and effectively you embed and operationalise ESG will determine your ability to attract investment and talent, and deliver on your purpose and potential.
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