Sustainable Investing at Wealth Management Firms: Q&A with Stephen Freedman, Head of Thematic and Sustainable Investing Strategies, UBS Wealth Management
Stephen Freedman, Head of Thematic and Sustainable Investing Strategies, UBS Wealth Management, recently spoke with US SIF: The Forum for Sustainable and Responsible Investment about the growing number of wealth management firms that have emphasized sustainable investing. Stephen Freedman addresses the reasons behind this trend and why it’s important for firms to adjust.
US SIF: Why has UBS, along with other large, conventional firms started to focus in the past several years on sustainable investment?
Stephen Freedman: What we are seeing across different parts of society is an expectation that companies should play a more positive role with respect to sustainability. We’re seeing a pick-up in demand for sustainable investing. Because stakeholders care, these issues become relevant—material to the success of companies. And therefore, as advisors to investors, we believe it’s very important to incorporate these factors regardless of whether it’s something a client explicitly wants. It’s good business practice.
US SIF: Can you speak to how much influence staff working on sustainable or ESG investing has on the overall investment strategy and research priorities at UBS?
Stephen Freedman: It’s still a small fraction of staff involved in this area, but there’s a lot of potential for leverage. Most people involved have other jobs—it’s not as though we’ve created a centralized unit with people just focused on sustainability. It really has to be across the board, with people who have traditional jobs looking at sustainability in addition to what they are doing. We’re not creating things just as an art form. This is something that has to make sense from a business perspective—so of course you need expertise; you need people who can drive the specialized knowledge to spokespersons within all the product areas. For instance, financial advisors that can represent sustainable investing make the ideas all the more credible.
US SIF: In what way do you think the range of ESG products and services offered by firms like UBS will change over the next five years?
Stephen Freedman: There’s significant momentum that’s been building over the last two years. I think you’re really going to see a shift from a niche-type offering to something much more mainstream. I think we’re going to see much larger-scale adoption of these products as platforms such as UBS become more robust and better able to fulfill sustainable investing needs across all asset classes. It’s not quite clear that you can really fill all asset class buckets as effectively as, say, U.S. equities—but I think we’re going to get there in the next few years. And as a result, it’s going to be possible for investors who are very dedicated to sustainable investing to fulfill all their needs with that type of approach.
US SIF: Why has UBS, along with other large, conventional firms started to focus in the past several years on sustainable investment?
Stephen Freedman: What we are seeing across different parts of society is an expectation that companies should play a more positive role with respect to sustainability. We’re seeing a pick-up in demand for sustainable investing. Because stakeholders care, these issues become relevant—material to the success of companies. And therefore, as advisors to investors, we believe it’s very important to incorporate these factors regardless of whether it’s something a client explicitly wants. It’s good business practice.
What we are seeing across different parts of society is an expectation that companies should play a more positive role with respect to sustainability.
US SIF: Can you speak to how much influence staff working on sustainable or ESG investing has on the overall investment strategy and research priorities at UBS?
Stephen Freedman: It’s still a small fraction of staff involved in this area, but there’s a lot of potential for leverage. Most people involved have other jobs—it’s not as though we’ve created a centralized unit with people just focused on sustainability. It really has to be across the board, with people who have traditional jobs looking at sustainability in addition to what they are doing. We’re not creating things just as an art form. This is something that has to make sense from a business perspective—so of course you need expertise; you need people who can drive the specialized knowledge to spokespersons within all the product areas. For instance, financial advisors that can represent sustainable investing make the ideas all the more credible.
US SIF: In what way do you think the range of ESG products and services offered by firms like UBS will change over the next five years?
Stephen Freedman: There’s significant momentum that’s been building over the last two years. I think you’re really going to see a shift from a niche-type offering to something much more mainstream. I think we’re going to see much larger-scale adoption of these products as platforms such as UBS become more robust and better able to fulfill sustainable investing needs across all asset classes. It’s not quite clear that you can really fill all asset class buckets as effectively as, say, U.S. equities—but I think we’re going to get there in the next few years. And as a result, it’s going to be possible for investors who are very dedicated to sustainable investing to fulfill all their needs with that type of approach.