Client appetite for environmental, social and governance (ESG) factors is rising as investors recognise they need to protect their investments for the long term, Solaris Investment Management said.
The boutique fund manager noted an increase in the number of its clients considering ESG issues in their investment decision-making process and management of their portfolios.
"Investors are increasingly recognising that they must protect and manage their investments for the long term," Solaris Investment Management ESG analyst Lisa Domagala told InvestorDaily.
"They do this through considering ESG risks in their investment decision-making processes and in the management of their investment portfolios.
"Super funds as investors must therefore monitor how their investee companies manage the ESG impacts of their activities and there are a wide range of ESG issues which may be relevant to Australian companies."
Many asset owners are very active in the ESG space and are requiring their asset managers and investment consultants to be equally familiar of the risks and rewards posed by ESG factors.
Domagala said several of Solaris Investment Management's institutional clients have requested ESG cognisance form part of their investment mandate.
"Client appetite for ESG issues appears to be gradually increasing," she said.
Solaris Investment Management has also seen a shift in the retail space where there is a growing interest from advisers, researchers and platforms about how to integrate EGS issues as part of its investment process.
"Advisers need to be confident that fund managers are considering all material factors affecting investment portfolios," she said.
She said advisers should have more dialogue with fund managers to ascertain their approach to ESG issues.
The boutique fund manager appointed Domagala as ESG specialist last year after superannuation funds flagged the increasing importance of ESG matters.
