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Emerging alternatives managers struggle to find ESG solutions and services

ESG ManagerFunds Europe's 'Emerging Managers Survey' highlights lack of available ESG expertise a challenge for new managers amid soaring appetite for sustainable strategies.

Being able to find environmental, social and governance (ESG) solutions in their funds’ jurisdiction is the biggest difficulty facing emerging managers in the alternatives space, according to the ‘Funds Europe Emerging Manager Survey’.

The survey found emerging managers – those with less than £300 million in assets ranked finding ESG expertise as the greatest difficulty in their current domicile, ranking above software & systems and fund accounting services.

ESG investing has become increasingly popular among institutional investors in recent years as awareness has grown.

However, the lack of standardisation and skills means there is often a shortage of solutions, particularly given the distinctive nature of alternative investments.

Elliot Refson, head of funds at Jersey Finance, said: “Deutsche Bank expects ESG assets to exceed $100 trillion by 2028, and both Bloomberg and PWC have made similar forecasts.

“These forecasts imply ESG will permeate all areas of alternatives and will become a key aspect of mainstream investments,” he said.

“Simply put, ESG is making a difference for positive change as a by-product of investment; it is a mindset. Therefore, the role of an international financial centre such as Jersey must be more than regulatory – it has to respect that mindset.

“In Jersey, we provide an environment where ESG is embedded across all sectors of society and not simply treated as a product or service line.”

Another significant challenge for emerging managers was finding the right software and systems for their strategies.

Advances in modern portfolio management and trading mean creating systems and processes from the ground up is likely to be prohibitively expensive and require considerable expertise. Therefore, emerging managers must rely on third-party technology partners to help them with their day-to-day operations.

The 'Funds Europe Emerging Manager Survey' – in association with Jersey Finance – gathered the views of more than 100 alternative fund managers from around the world to discover the most important issues facing the industry.

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