First below is a nice summary from PGIM CEO:
“ 1. ESG is a multi-year journey
2. Role of investment Manager – In a transparent and data driven way, incorporate ESG factors into the investment process to offer products required by clients based on the preferences.
3. ESG investment cannot be just passive. “
See video link here – https://bit.ly/3KK90oO
So how can we measure the portfolio performance/results in the above scenario?
– How about clients come up with percentage allocations based on their ESG preference to be used as input to create a custom benchmark?
And what does this mean for Active Managers –
– There is a need for a robust data management framework to help clients define their ESG preferences.
– It is necessary. to provide real-time ‘What-If’ analysis on client portfolios to help analyze portfolio risk (ex-ante) in order to understand impact of such changes.
– A real-time Business Intelligence (BI) framework will be a great add-on for managers to develop custom products quickly.