While fund managers recognise the importance of ESG factors, there is considerable variation in how these signals are being integrated into the investment process.
Lund said: “Some investment managers have not integrated these processes as well as they could have done.”
It is also difficult to determine how important role ESG factors have played in a particular investment decision, he added.
While it is primarily institutional investors which are focusing on these factors, the wealth management industry will need to adopt this practice.
Van Hyfte said: “Demand is coming from consumers with more than 80% of millennials wanting managers to incorporate the ESG factors into the investment process.”
But it will take time before a focus on ESG becomes a part of the mainstream fund selection process. At the moment, there are more important criteria which need to be matched to appeal to a broad client base.
“This will change over time, however, as momentum builds behind this trend,” Van Hyfte said.
