Investors with an interest in environmental, social, and governance (ESG) issues are increasingly demanding approaches that fit their needs. This demand, along with asset flows, is spurring an interest in ESG analytics. Going, or gone, are the days when plain-vanilla funds will satisfy those investors who can use fractional shares to create their own low-cost, risk-adjusted portfolios that stand free of any mutual fund wrapper.
Nimble analysts and wealth advisors can leverage a proliferation of ESG-related information, using third-party tools that take in a wide field of information, official and unvetted, and use artificial intelligence and machine learning to refine insights and actionable data. This can create real value for analysts and advisors alike. Over time, the investor population will be further fragmented and the demands for ESG investing will become increasingly voracious. Tools that capture, display, and contextualize emerging data sources will play a pivotal role for advisors and firms looking to thrive amid shifting economics.