How ESG is shaping the future of funds, corporations and family businesses

Private wealth

Wealthy business owners and their families have been focused on ESG for a while, but the Coronavirus has served to push wealthy families and individuals to think again about ESG, particularly as they assess how they can support their employees and the communities in which they are present.

Now, more than ever, social responsibility is a key consideration. Overall, however, we’ve seen our clients look to invest in and run businesses supported by strong ESG practices for some time now. This isn’t a short-term trend; we expect that the focus on ESG will transcend generations.

In general terms, family businesses have also looked to embrace ESG factors as part of more sustainable business models, and the result is more frank and open discussion about complex ESG themes, both by younger and older members of the family. Gender balance on boards, having proper conflict resolution processes in place and striving for real board independence are common themes.

Family offices, too, are thinking deeply about ESG both in terms of their investment strategy, philanthropy and their own operations.

Funds

The capital markets have seen extensive turbulence over the past couple of months, as fund managers have tried to ride out volatility and simultaneously identify good share valuations precipitated by the market dislocation.

A reoccurring theme has been that the companies that have consistently focused on sustainability and ESG themes for a long time already are emerging as some of today’s strongest players and are increasingly attractive for the fund managers and investors we support.

Practically speaking, ESG provides a number of tangible advantages in terms of positive impact for those that run and work for a business, as well as society at large. The pandemic and resulting shift in working processes and the need for social distancing has also helped underline companies that focus on ESG can be more resilient to crisis and change.

Companies with a strong ESG focus have shown their worth in the face of challenging markets. In turn, this has put them firmly on the map of fund managers and investors. Increasingly, I believe we will soon see a shift where investors and fund managers will look to companies who emphasize ESG factors (alongside other standard valuation tools and metrics) as the norm, rather than a specific investment strategy.

Companies, entrepreneurs and businesses across the globe

ESG is naturally important to global corporations who have been, historically seen, actually the first to consider and apply ESG best practices.

Also in Asia, where ESG is often assumed to be in its infancy, the market participants are confident that momentum is growing and that the region possesses the will and the means to progress rapidly.

ZEDRA is particularly well positioned to support with governance, compliance, and regulatory considerations being itself highly regulated across various jurisdictions.

Governance is always important for our clients, and it’s seen as a fundamental element in the building of a sustainable business that can endure over the long-term.

The Coronavirus has compounded business’ desire to build strong companies with solid leadership, sound processes and policies, appropriate oversight and in accordance with rules and regulations.

Whether it is Europe or Asia, we’re seeing that ESG has become more crucial than ever and clients are looking to us as a service provider to guide them through all the complexities. Often, they are looking for assistance from an expert firm who can facilitate some of the finer points and have extensive knowledge of relevant legal and regulatory requirements and best practices.

For more information on how ZEDRA can guide you through ESG, please get in touch.