Environmental, Social, and Governance (ESG) data is working its way into the center of most investment discussions. Fund companies, investment managers, private equity firms, real estate investors – nearly every active participant in the markets is determining how to factor ESG into their models.
The financial advisor world is no exception. In fact, it’s one of the central pieces of the puzzle: advisors serve as a conduit to a tremendous pool of assets held by clients who expect their investments to be managed with their best interests at the forefront.
ESG is fast becoming an indispensable part of that expectation. While it has its roots in sustainable investing and is commonly associated with “doing social good,” ESG is deeper than that. It provides more information on how companies are managing risks associated with a variety of factors, including climate change mitigation and adaptation, human capital, and Board composition and independence. Companies that aren’t considering these types of issues are putting themselves at significant risk. Investors need to consider these inputs as part of their decision-making process, even if some of the data is still being refined.
More financial advisors are steadily moving to embrace ESG. But that introduces the next challenge: how should ESG be reflected in an advisor’s brand and marketing?
It’s a complicated issue, and there is no single answer or silver bullet. There are, however, best practices that provide a solid foundation:
- Simplify the process
The investment process can be difficult to explain even without ESG in the mix. It’s important to understand how ESG fits into the investment approach so that it can be successfully conveyed to clients. - Articulate your ESG “why”
It’s not just about how ESG is integrated. Clients and prospects want to know why advisors are adopting ESG. Knowing the “why” reinforces authenticity and credibility, building trust that leads to better relationships. - Back it up with ESG content
Regardless of how central a role ESG plays in an advisory firm’s brand, the audience will not consider it “real” unless there is content that helps tell the story. Website, blog posts, and social media are good entry points for content distribution.
Integrating new aspects of the business into a brand isn’t always straightforward. But it can be done in a way that improves client relationships and opens new opportunities for growth.
For more details on building your ESG story on a solid foundation, read our guide: Three Steps to Making ESG Part of Your Brand.
