A Catalyst for Innovative Investment Solutions
Interest in sustainable investing has significantly grown in recent years, primarily driven by younger generations seeking to align their portfolios with their values. Millennials and Generation Z (Gen Z) are both showing a greater awareness of the impacts of climate change and social responsibility and place a greater emphasis on these issues than the generations before them (Forbes, 2022). Particularly as these generations accumulate wealth through the workforce and as beneficiaries of the Great Wealth Transfer, the increasing environmental and social consciousness of these younger investors is already significantly influencing the investment landscape.
On top of this, a growing proportion of investors in the market are tech-native and desire robust “data-on-demand”. As such, ensuring access to transparent sustainability data that includes environmental, social, and governance (ESG) factors is paramount in achieving the personal and profitable goals of the modern investor. Matter’s expertise in high-quality ESG data and analyses, combined with Performativ’s leading wealth management solution, address these demands of this new age of investors.
Matter and Performativ’s partnership empowers wealth managers and investors to make informed investment decisions with greater confidence. Matter’s ESG data is integrated into Performativ’s portfoliomanagement platform, offering a single, seamless tool for building sustainable, long-term portfolios. Pairing the capabilities of both companies, wealth managers and high-net-worth individuals are equipped with the necessary toolsand insights to achieve a positive impact, in alignment with their investment objectives.
One of the primary drivers of the significant shift towards sustainable investing over the last decade has been the changing demographic of investors. Millennials and Gen Z are now the largest generations in the workforce and are also expected to inherit trillions in wealth (Nasdaq, 2022). The two generations, born between 1995 and 2010, already make up 49% of the world population and show significant interest in ESG factors. According to a survey by NatWest (2021), 67% of UK investors stated that sustainable investing is important to them, and they would be willing to hold sustainable investments for two years longer than the average investor.
An increase in sustainable investing is expected as Millennials and Gen Z accumulate more capital. This is urging traditional financial institutions to adapt and offer moreESG-focused products. According to a study by Capital Group, 89% of surveyed investors take ESG into account before deciding where to invest (Bankrate, 2023).
Momentum: According to a 2019 report by KPMG, assets under management (AUM) of sustainable investments reached $30 trillion globally, a 34% increase from 2016.
Screening: Negative (exclusion) and positive (inclusion) asset screening are becoming deciding factors and important data points. ESG frameworks and regulatory requirements like the UN’s PRI, Global Impact, and International Finance Corporation (IFC) provide guidelines and standards for the screenings. Though the frameworks vary by scope, region, and applicability, they collectively contribute to standardising and integrating ESG concerns in the analysis.
Impact investing: Moving beyond simply regulating and labelling ESG scores for no-harm-done or least carbon “footprint”, the industry is looking at a rise in impact investing. This goes beyond ESG integration and focuses on investments with a positive and measurable impact. These include, for example, renewable energy projects, affordable housing initiatives, or companies working towards specific Sustainable Development Goals (SDGs).
Investors are increasingly recognising the impacts their portfolios have on the planet, resulting in sustainable investing becoming the norm rather than the exception for the modern investor. A generation native to technology, demands sophisticated platforms capable of collecting vast amounts of high-quality data with speed and precision. With the rising demand for investment data transparency, an opportunity emerges for wealth managers to differentiate themselves by delivering this capability within their offering.
As the impacts of climate change and social justice issues are emerging across the globe, investing sustainably has never been more crucial. New regulations and reporting requirements, such as Taskforce on Climate-related Financial Disclosures (TCFD), Corporate SustainabilityReporting Directive (CSRD), and Sustainable Finance Disclosure Regulation (SFDR/SDR), are driving the adoption of automation solutions. Navigating the complex landscape of ESG metrics, directives, and standards presents significant challenges. Yet, the urgency for investors to be thoroughly informed about their portfolios’ risks and impacts is now greater than ever before.
Historically, many investors have lacked access to ESG data that would allow them to see the impacts of their investments across their entire portfolio. By integrating transparent and granular ESG data directly into wealth management solutions like Performativ via APIs, wealth managers and investors can make more impactful decisions on capital allocations and empowered to deploy sustainable investment strategies that align with investors’ goals.
Political initiatives of corporate regulations and directives have intensified over the last couple of years, showing an eagerness from governments to encourage financial sustainability as a tactic to improve planetary and social welfare. Inherently, investment firms must adapt to stay compliant. As reporting requirements grow, innovative solutions that allow for easier, faster, and more accurate data processing becomes a necessity to save resources and mitigate risks – enter Matter and Performativ. Matter supports some of the most frequent reporting requirements and frameworks, such as:
The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework for companies to disclose their climate-related financial risks and opportunities in a consistent and transparent manner. It is already mandatory for certain entities in the UK and New Zealand.
The Corporate Sustainability Reporting Directive (CSRD) sets out comprehensive sustainability reporting requirements for large and listed companies in the EU, as well as certain non-EU companies with significant EU activities. Compliance is mandatory for large EU companies starting in 2024 and includes third-party assurance of reported data.
The Sustainable Finance Disclosure Regulation (SFDR) sets forth transparency requirements for financial market participants and financial advisers within the EU regarding the integration of sustainability risks and adverse sustainability impacts in their investment processes. This regulation is compulsory for financial products such as portfolios managed by creditinstitutions, investment firms, AIFs, UCITS, and pension products.
While the growth in sustainable investing is driven by changing investor demographics, regulatory developments, and technological advancements, there exists a heightened expectation for comprehensive wealth management solutions that seamlessly integrate ESG data. Matter and Performativ work full-time to ensure that wealth managers and investors alike have access to technology and tools that keep up with evolving regulatory frameworks and continue to develop more streamlined, intuitive, and optimised models to simplify extensive reporting processes.
As established, access to comprehensive and transparent data has made it easier for investors to analyse information about companies and their ESG practices. The next challenge for modern technology is now to provide detailed overviews and diverse indices that offer valuable insights into the complexities that these metrics face.
About Matter’s solutions: Being accurately informed on corporate sustainability is crucial for capital decisions. It requires high-quality data, transparent methodologies based on recognised frameworks, and a powerful platform to deliver analyses in seconds. Depending on the specific needs of an investor – such as regional regulations, individual targets, or internal processes– Matter offers a wide array of solutions. Some of them as described below:
SDG Revenue Fundamentals provides a framework to alignment: The tool aligns the revenue streams a company generates with the UN’s sustainable development goals (SDGs). By analysing over50k listed companies, across 8,000 revenue streams, Matter offers data at both the aggregate and individual SDG level. The tool examines the core of a company's impact, products, and services.
Nature Impact & Dependency metrics built on TNFD guidelines: Analysing +59k companies’ revenue streams and 1,000 physical assets allows Matter to reveal companies’ core relationship with natural systems. By quantifying these findings to which a portfolio relies on specific natural resources, Matter can measure its impact on over 30 natural capital issues on both portfolio and company level.
SFDR as part of the EU Sustainable Finance Action Plan: SFDR introduced new rules on the incorporation of sustainability risksand factors, including on the Principal Adverse Impacts (PAI) of their investments. However, Matter’s platform, with its granular data and insights, provide an automated solution to SFDR reporting, ensuring the simplest reporting process of PAIs, as well as other critical metrics for SFDR Article 8and 9 products.
About Performativ’s solutions: Performativ’s portfolio management platform empowers wealth managers to make informed investment decisions with their clients’ total wealth in view, while also automating their most critical businessprocesses. Independent wealth managers and single- and multi-family offices ranging from €100M to €2B+ AUM are streamlining their wealth management offering and becoming fit for the future with Performativ’s comprehensive solution.
Superior connectivity and consolidation: Through sophisticated data consolidation including multi-custodian data aggregation and external data integration, such as Matterfor ESG analysis, Performativ’s platform showcases total portfolios across liquid assets, private equity, real estate and other non-bankable assets.
Core operating system: Key wealth and business management functionality come out-of-the-box and are enabled, tailored to each wealth manager’s business needs, including features such as:
Usability and accessibility: Performativ’s easy-to-use interface and agile setup enable wealth managers and their clients to view portfolios on the go through powerful, white-labelled portals and mobile app. Wealth managers can create customised charts, dashboards, and reports to enhance user experience.
Scalable technology: Performativ is a SaaS solution built on modern technology and is committed to continuous feature development and enhancement. As wealth manager’s businesses grow, their Performativ platform will grow them, while ensuring top security and privacy across all activities.
Investors increasingly allocating capital to companies with strong ESG practices leads to the creation of a wide range of ethical investment products, including mutual funds, exchange-traded funds (ETFs), and separately managed accounts. ESG and sustainable investing offer compelling benefits for both wealth managers and the financial markets. Investors gain access to new investment opportunities in companies with strong ESG practices, potentially leading to long-term value creation and improved risk management. The companies embracing this evolution have previously been hailed for being well-positioned for the future – considering environmental and social factors –and while that point remains, it seems evident that future is already upon us.
“We think ESG is about as political as gravity. It's not political. It's about thinking long term. And it's about thinking about your returns.”
- Nicolai Tangen, CEO of Norway’s Bank Investment Management
The quote from the CEO of the world’s largest sovereign wealth fund highlights that this shift towards sustainable investing is also driving the development of new opportunities across various sectors, impacting the overall financial market landscape. Portfolio diversification is enhanced by incorporating companies from sectors with a sustainability focus to promote a more balanced and less volatile market. Interestingly, the landscape today shows that wealth managers prosper from catering to this growing demand, attracting new clients, and potentially building deeper relationships based on shared values. Integrating ESG as a core pillar of their strategic investment offering allows wealth managers to provide a service of more impactful data-driven decisions, ultimately strengthening their risk management strategies.
While sustainable investing can offer substantial advantages in mitigating risks and identifying long-term opportunities, the granularity and reliability of the data is critical for driving successful ESG investment outcomes.
Data Integrity: Companies who are focused on sustainability often experience difficulties in finding traceable data to support their investment decisions. To overcome this hurdle, investors need to carefully evaluate and determine what financial data on which they choose to base their investments. Matter is committed to providing accuracy, objectivity, and transparency in data sets.
Compliance: Another obstacle for risk management to consider is that sustainable investing is subject to an evolving regulatory and political landscape, which brings risks of noncompliance and greenwashing. However, the following tools are the most efficient ways to counter this challenge:
Lack of measurability and standardisation: This makes it difficult for investors to compare and evaluate just how sustainable different entities are. In an aim to optimise and streamline, Matter leads the way with innovative technology and a dedication to promote insightful metrics, comprehensive ESG reporting, and reliable data analysis. The goal is always to increase transparency, empower investors to make choices based on a company's true ESG performance, and consistently deliver on a platform for a more credible and impactful sustainable investing experience.
As data and technology providers become stronger at data capturing and analysis, wealth managers and investors alike have more information at their fingertips. This, in turn, means that they are both more capable of making value-aligned decisions than ever before. Matter and Performativ are leading the charge in providing robust solutions that enable decision-makers to reallocate their time from manual data collection and reconciliation, into strategic, AI-generated and reliable analysis. By empowering market influencers with the tools to create a more sustainable world for tomorrow that everyone benefits.
Given the pronounced impacts of the generational shift, sustainable investment is inevitably poised to gain a reigning foothold within the financial landscape. According to a report from Morgan Stanley, 88%of surveyed US Millennials expressed interest in sustainable investing (Morgan Stanley, 2021). BlackRock argues that sustainable investing will quickly expand beyond traditional asset classes like equities and bonds and into alternative assets like real estate, infrastructure, and private equity (BlackRock, 2024). As the next generation press forward on sustainable actions, a heightened interest from wealth managers in the near future does not seem far-fetched (JPMorgan, 2024).
From the perspective of the wealth management sector, investors now have unparalleled opportunities to invest in emerging and expanding industries. Matter and Performativ recognise that these opportunities call for data-driven decisions that can evaluate the intricate metrics of ESG investments. The innovative strategies employed by both companies provide wealth managers with a comprehensive set of tools to keep ESG and sustainable investing a key focus, ensuring that investments are both informed and impactful.
Publication Details
Authors: Performativ: Marissa Weiss & Matter: Mathilde Samson
Date: August 9th, 2024
Interest in sustainable investing has significantly grown in recent years, primarily driven by younger generations seeking to align their portfolios with their values. Millennials and Generation Z (Gen Z) are both showing a greater awareness of the impacts of climate change and social responsibility and place a greater emphasis on these issues than the generations before them (Forbes, 2022). Particularly as these generations accumulate wealth through the workforce and as beneficiaries of the Great Wealth Transfer, the increasing environmental and social consciousness of these younger investors is already significantly influencing the investment landscape.
On top of this, a growing proportion of investors in the market are tech-native and desire robust “data-on-demand”. As such, ensuring access to transparent sustainability data that includes environmental, social, and governance (ESG) factors is paramount in achieving the personal and profitable goals of the modern investor. Matter’s expertise in high-quality ESG data and analyses, combined with Performativ’s leading wealth management solution, address these demands of this new age of investors.
Matter and Performativ’s partnership empowers wealth managers and investors to make informed investment decisions with greater confidence. Matter’s ESG data is integrated into Performativ’s portfoliomanagement platform, offering a single, seamless tool for building sustainable, long-term portfolios. Pairing the capabilities of both companies, wealth managers and high-net-worth individuals are equipped with the necessary toolsand insights to achieve a positive impact, in alignment with their investment objectives.
One of the primary drivers of the significant shift towards sustainable investing over the last decade has been the changing demographic of investors. Millennials and Gen Z are now the largest generations in the workforce and are also expected to inherit trillions in wealth (Nasdaq, 2022). The two generations, born between 1995 and 2010, already make up 49% of the world population and show significant interest in ESG factors. According to a survey by NatWest (2021), 67% of UK investors stated that sustainable investing is important to them, and they would be willing to hold sustainable investments for two years longer than the average investor.
An increase in sustainable investing is expected as Millennials and Gen Z accumulate more capital. This is urging traditional financial institutions to adapt and offer moreESG-focused products. According to a study by Capital Group, 89% of surveyed investors take ESG into account before deciding where to invest (Bankrate, 2023).
Momentum: According to a 2019 report by KPMG, assets under management (AUM) of sustainable investments reached $30 trillion globally, a 34% increase from 2016.
Screening: Negative (exclusion) and positive (inclusion) asset screening are becoming deciding factors and important data points. ESG frameworks and regulatory requirements like the UN’s PRI, Global Impact, and International Finance Corporation (IFC) provide guidelines and standards for the screenings. Though the frameworks vary by scope, region, and applicability, they collectively contribute to standardising and integrating ESG concerns in the analysis.
Impact investing: Moving beyond simply regulating and labelling ESG scores for no-harm-done or least carbon “footprint”, the industry is looking at a rise in impact investing. This goes beyond ESG integration and focuses on investments with a positive and measurable impact. These include, for example, renewable energy projects, affordable housing initiatives, or companies working towards specific Sustainable Development Goals (SDGs).
Investors are increasingly recognising the impacts their portfolios have on the planet, resulting in sustainable investing becoming the norm rather than the exception for the modern investor. A generation native to technology, demands sophisticated platforms capable of collecting vast amounts of high-quality data with speed and precision. With the rising demand for investment data transparency, an opportunity emerges for wealth managers to differentiate themselves by delivering this capability within their offering.
As the impacts of climate change and social justice issues are emerging across the globe, investing sustainably has never been more crucial. New regulations and reporting requirements, such as Taskforce on Climate-related Financial Disclosures (TCFD), Corporate SustainabilityReporting Directive (CSRD), and Sustainable Finance Disclosure Regulation (SFDR/SDR), are driving the adoption of automation solutions. Navigating the complex landscape of ESG metrics, directives, and standards presents significant challenges. Yet, the urgency for investors to be thoroughly informed about their portfolios’ risks and impacts is now greater than ever before.
Historically, many investors have lacked access to ESG data that would allow them to see the impacts of their investments across their entire portfolio. By integrating transparent and granular ESG data directly into wealth management solutions like Performativ via APIs, wealth managers and investors can make more impactful decisions on capital allocations and empowered to deploy sustainable investment strategies that align with investors’ goals.
Political initiatives of corporate regulations and directives have intensified over the last couple of years, showing an eagerness from governments to encourage financial sustainability as a tactic to improve planetary and social welfare. Inherently, investment firms must adapt to stay compliant. As reporting requirements grow, innovative solutions that allow for easier, faster, and more accurate data processing becomes a necessity to save resources and mitigate risks – enter Matter and Performativ. Matter supports some of the most frequent reporting requirements and frameworks, such as:
The Task Force on Climate-related Financial Disclosures (TCFD) provides a framework for companies to disclose their climate-related financial risks and opportunities in a consistent and transparent manner. It is already mandatory for certain entities in the UK and New Zealand.
The Corporate Sustainability Reporting Directive (CSRD) sets out comprehensive sustainability reporting requirements for large and listed companies in the EU, as well as certain non-EU companies with significant EU activities. Compliance is mandatory for large EU companies starting in 2024 and includes third-party assurance of reported data.
The Sustainable Finance Disclosure Regulation (SFDR) sets forth transparency requirements for financial market participants and financial advisers within the EU regarding the integration of sustainability risks and adverse sustainability impacts in their investment processes. This regulation is compulsory for financial products such as portfolios managed by creditinstitutions, investment firms, AIFs, UCITS, and pension products.
While the growth in sustainable investing is driven by changing investor demographics, regulatory developments, and technological advancements, there exists a heightened expectation for comprehensive wealth management solutions that seamlessly integrate ESG data. Matter and Performativ work full-time to ensure that wealth managers and investors alike have access to technology and tools that keep up with evolving regulatory frameworks and continue to develop more streamlined, intuitive, and optimised models to simplify extensive reporting processes.
As established, access to comprehensive and transparent data has made it easier for investors to analyse information about companies and their ESG practices. The next challenge for modern technology is now to provide detailed overviews and diverse indices that offer valuable insights into the complexities that these metrics face.
About Matter’s solutions: Being accurately informed on corporate sustainability is crucial for capital decisions. It requires high-quality data, transparent methodologies based on recognised frameworks, and a powerful platform to deliver analyses in seconds. Depending on the specific needs of an investor – such as regional regulations, individual targets, or internal processes– Matter offers a wide array of solutions. Some of them as described below:
SDG Revenue Fundamentals provides a framework to alignment: The tool aligns the revenue streams a company generates with the UN’s sustainable development goals (SDGs). By analysing over50k listed companies, across 8,000 revenue streams, Matter offers data at both the aggregate and individual SDG level. The tool examines the core of a company's impact, products, and services.
Nature Impact & Dependency metrics built on TNFD guidelines: Analysing +59k companies’ revenue streams and 1,000 physical assets allows Matter to reveal companies’ core relationship with natural systems. By quantifying these findings to which a portfolio relies on specific natural resources, Matter can measure its impact on over 30 natural capital issues on both portfolio and company level.
SFDR as part of the EU Sustainable Finance Action Plan: SFDR introduced new rules on the incorporation of sustainability risksand factors, including on the Principal Adverse Impacts (PAI) of their investments. However, Matter’s platform, with its granular data and insights, provide an automated solution to SFDR reporting, ensuring the simplest reporting process of PAIs, as well as other critical metrics for SFDR Article 8and 9 products.
About Performativ’s solutions: Performativ’s portfolio management platform empowers wealth managers to make informed investment decisions with their clients’ total wealth in view, while also automating their most critical businessprocesses. Independent wealth managers and single- and multi-family offices ranging from €100M to €2B+ AUM are streamlining their wealth management offering and becoming fit for the future with Performativ’s comprehensive solution.
Superior connectivity and consolidation: Through sophisticated data consolidation including multi-custodian data aggregation and external data integration, such as Matterfor ESG analysis, Performativ’s platform showcases total portfolios across liquid assets, private equity, real estate and other non-bankable assets.
Core operating system: Key wealth and business management functionality come out-of-the-box and are enabled, tailored to each wealth manager’s business needs, including features such as:
Usability and accessibility: Performativ’s easy-to-use interface and agile setup enable wealth managers and their clients to view portfolios on the go through powerful, white-labelled portals and mobile app. Wealth managers can create customised charts, dashboards, and reports to enhance user experience.
Scalable technology: Performativ is a SaaS solution built on modern technology and is committed to continuous feature development and enhancement. As wealth manager’s businesses grow, their Performativ platform will grow them, while ensuring top security and privacy across all activities.
Investors increasingly allocating capital to companies with strong ESG practices leads to the creation of a wide range of ethical investment products, including mutual funds, exchange-traded funds (ETFs), and separately managed accounts. ESG and sustainable investing offer compelling benefits for both wealth managers and the financial markets. Investors gain access to new investment opportunities in companies with strong ESG practices, potentially leading to long-term value creation and improved risk management. The companies embracing this evolution have previously been hailed for being well-positioned for the future – considering environmental and social factors –and while that point remains, it seems evident that future is already upon us.
“We think ESG is about as political as gravity. It's not political. It's about thinking long term. And it's about thinking about your returns.”
- Nicolai Tangen, CEO of Norway’s Bank Investment Management
The quote from the CEO of the world’s largest sovereign wealth fund highlights that this shift towards sustainable investing is also driving the development of new opportunities across various sectors, impacting the overall financial market landscape. Portfolio diversification is enhanced by incorporating companies from sectors with a sustainability focus to promote a more balanced and less volatile market. Interestingly, the landscape today shows that wealth managers prosper from catering to this growing demand, attracting new clients, and potentially building deeper relationships based on shared values. Integrating ESG as a core pillar of their strategic investment offering allows wealth managers to provide a service of more impactful data-driven decisions, ultimately strengthening their risk management strategies.
While sustainable investing can offer substantial advantages in mitigating risks and identifying long-term opportunities, the granularity and reliability of the data is critical for driving successful ESG investment outcomes.
Data Integrity: Companies who are focused on sustainability often experience difficulties in finding traceable data to support their investment decisions. To overcome this hurdle, investors need to carefully evaluate and determine what financial data on which they choose to base their investments. Matter is committed to providing accuracy, objectivity, and transparency in data sets.
Compliance: Another obstacle for risk management to consider is that sustainable investing is subject to an evolving regulatory and political landscape, which brings risks of noncompliance and greenwashing. However, the following tools are the most efficient ways to counter this challenge:
Lack of measurability and standardisation: This makes it difficult for investors to compare and evaluate just how sustainable different entities are. In an aim to optimise and streamline, Matter leads the way with innovative technology and a dedication to promote insightful metrics, comprehensive ESG reporting, and reliable data analysis. The goal is always to increase transparency, empower investors to make choices based on a company's true ESG performance, and consistently deliver on a platform for a more credible and impactful sustainable investing experience.
As data and technology providers become stronger at data capturing and analysis, wealth managers and investors alike have more information at their fingertips. This, in turn, means that they are both more capable of making value-aligned decisions than ever before. Matter and Performativ are leading the charge in providing robust solutions that enable decision-makers to reallocate their time from manual data collection and reconciliation, into strategic, AI-generated and reliable analysis. By empowering market influencers with the tools to create a more sustainable world for tomorrow that everyone benefits.
Given the pronounced impacts of the generational shift, sustainable investment is inevitably poised to gain a reigning foothold within the financial landscape. According to a report from Morgan Stanley, 88%of surveyed US Millennials expressed interest in sustainable investing (Morgan Stanley, 2021). BlackRock argues that sustainable investing will quickly expand beyond traditional asset classes like equities and bonds and into alternative assets like real estate, infrastructure, and private equity (BlackRock, 2024). As the next generation press forward on sustainable actions, a heightened interest from wealth managers in the near future does not seem far-fetched (JPMorgan, 2024).
From the perspective of the wealth management sector, investors now have unparalleled opportunities to invest in emerging and expanding industries. Matter and Performativ recognise that these opportunities call for data-driven decisions that can evaluate the intricate metrics of ESG investments. The innovative strategies employed by both companies provide wealth managers with a comprehensive set of tools to keep ESG and sustainable investing a key focus, ensuring that investments are both informed and impactful.
Publication Details
Authors: Performativ: Marissa Weiss & Matter: Mathilde Samson
Date: August 9th, 2024
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