UK financial and technology business Defaqto has unveiled a ESG fund overview service for advisers.
Available through the firm’s financial planning software Defaqto Engage, ESG Reviews will provide investors with a range of information on the ESG credentials of various funds.
Among other things, Defaqto said it will cover:
- The fund’s or DFM ESG policy and how well the fund or portfolio aligns to it
- Product involvement, if any, in certain controversial areas
- ESG integration as per the three levels described above
- Any adherence to the UN Sustainable Development Goal’s
- The asset management firm’s voting and engagement policies with corporates on ESG
- The company resources in terms of ESG behind the fund
Defaqto said some six active funds have been reviewed so far but there is scope to include passive funds in the reviews in the future.
Pan Andreas (pictured), head of insight and consulting (funds and DFM), 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.”