Brokerages that effectively promote ESG/SRI offerings will be the ones to capitalize on this whirlwind trend. Sustainable, responsible and impact investing (SRI) has rapidly grown in demand as investors look to generate long-term returns and make a positive impact through environmental, social and governance (ESG) products.

Related assets in 2018 expanded to $12 trillion in the United States, up 38% from 2016 with a focus on issues related to climate change, tobacco, conflict risk, human rights and anti-corruption. Millennial investors are the main drivers of market growth, as they are twice as likely to invest in socially responsible companies. According to our 2019 investor survey, this demographic considers environmental (45%) and social justice (41%) criteria to be the most important in sustainable investing. As Millennials stand to inherit $30 trillion from their parents, they are a lucrative client segment for the financial services industry. Their preference for investments that fit their personal values is resolute, as 48% of Millennial investors reported that they are either “very willing” or “willing” to accept lower investment returns in order to address ESG/SRI goals.

Firms generally promote ESG/SRI offerings, but related research tools and appropriate filters are often lacking

Given the significance of this recent trend, Corporate Insight’s latest report reviews how 17 industry-leading firms promote ESG/SRI offerings. While most firms (76%) promote these themed investment offerings on their public sites, the extent of coverage varies, with only some firms offering detailed information on the topic.

Fidelity Public Site Make an Impact with ESG Investing Page (Truncated)

Additionally, firms are steadily introducing new ESG/SRI-themed ETFs, mutual funds and managed products, with six firms (35%) offering proprietary funds and five (29%) providing managed portfolios. For researching socially conscious investments, most firms (58%) include at least some form of ESG/SRI screener filter, though only one firm—Fidelity—offers such a filter for each of its screeners (i.e., stock, ETF and mutual fund). Merrill Edge and Lynch also stand out for their suite of research tools, as the firms’ Stock, Fund and Portfolio Stories offerings provide in-depth analyses on the ESG ratings of companies, mutual funds and client portfolios.

Key findings and recommendations for the best approach to promote ESG/SRI offerings

Our report uncovers the following key findings and best practice examples for how brokerage firms promote ESG/SRI offerings:

  • Firms should promote ESG/SRI investments to differentiate themselves
  • Proprietary ESG/SRI funds are concentrated among a subset of firms
  • ESG/SRI screener filters are prevalent, though not for all security types
  • Merrill’s Stock, Fund and Portfolio Stories provide in-depth ESG analyses
  • Educational resources can help clients navigate ESG complexities

Subscribers can read the full report on ESG/SRI offerings on our client portal. For access, or for more competitive intelligence on the online experience that brokerage firms provide investors, check out Corporate Insight’s e-Monitor research service offerings.