(Credit: Pixabay)Environmental, social, and corporate governance is gaining steam as the bright spot for innovation among banks and wealth managers as the private wealth sector's earnings forecast remains stagnant for 2023.
That’s according to a new study from Objectway to GlobalData, “Unlocking opportunity in challenging times: innovation in European Financial Services,” which queried bank and wealth managers about the European financial market. One of the biggest findings in the survey was the need for 52% managers to remain competitive by investing in full-spectrum innovation projects.
The current market forecasts revealed stagnant earnings for 2023, leading more managers to increase technology investments from 8.5% in 2022 to 9.2% in 2023. ESG is top of mind when it comes to innovation investments, as well. A whopping 84.5% of survey respondents indicated they plan to add or expand ESG investment options in the next three years.
“Sustainable investing is on the rise in Europe and globally, as awareness of positive social and environmental impact combined with improved financial returns grows," Luigi Marciano, CEO of Objectway Group, said in the report.
One of the most popular methods to develop or sharpen an ESG-compliant profile among 73% of respondents was creating new investment solutions. Across the industry, nearly all will be expanding their ESG capabilities in the coming years, the report found.
“ESG investments are on the rise among (high net worths) in Europe and indeed globally due to rising awareness for generating positive social and environmental impact along with better financial returns that were particularly played up during the pandemic,” the report stated. “Younger investors generally have a greater affinity for ESG investments, though it is growing amongst all age cohorts.”
To develop an ESG brand, respondents also stated asking clients about their ESG views (64.7%) or providing support and resources for financial education (48.5%) were important methods.
The findings come as more ESG reporting requirements are being adopted, with companies being required to report ESG disclosures alongside financial statements.
