The importance of business ethics
Momentum is building as a rapidly growing number of consumers, governments, institutional investors and corporations acknowledge the financial as well as physical threats posed by environmental, social and governance issues, such as climate change, greenhouse emissions and reliance on a fossil fuel-based economy.
Meanwhile, the global Covid-19 pandemic has intensified focus on societal responsibility and whether companies and business leaders are doing the ‘right thing’ through the crisis – by employees, stakeholders, and society.
In 2021, we have well and truly reached the tipping point for ESG and ethics in business.
As a result, younger demographics are increasingly demanding cleaner, greener and more ethically sound investment portfolios – as well as seeking to impact the way companies themselves behave and operate.
With these younger audiences expected to participate in the greatest transfer of wealth between generations the western world has ever seen over the next few years (estimated £5trn globally), they will be putting more pressure on their advisers and those managing their money to do so in accordance with ESG principles and values. And this will only heighten and intensify in the generations to come.
In the UK alone, it is estimated that at least £327bn is set to be passed on from baby boomers to around 300,000 younger potential clients over the next decade. What will this mean for how financial services firms and advisors must change to appeal to these emerging customer groups – in the short, medium, and even longer-term horizons.
As such, it is crucial that financial services companies pay far greater attention to articulating and demonstrating how ESG approaches not only influence advice, portfolios, asset allocation and investment decision-making, but also everyday business activity.
For wealth managers, IFAs and asset owners alike, it’s vital to focus on engaging with investor audiences around ESG criteria, metrics and vital societal issues to capture the hearts and minds of the new generation of investors looking for ethics in business.
Download our new report, ‘FleishmanHillard Wealth Report 2021: The Future of ESG & Sustainable Investing‘, to uncover how demand for ESG investing is surging and why financial services firms must up their game to engage a new generation of investors.
Ludo Baynham-Herd, Director
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January 17, 2022