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Covid-19 highlights ESG role in private banking
Clients see need for positive impact and better risk management
20 May 2021 | The Asset

Private banking clients are increasingly taking environmental, social and governance (ESG) factors such as biodiversity into account as the Covid-19 pandemic has raised their desire to invest in line with their values and to manage potential risks in their portfolios, a new survey finds.

Three quarters of the 2,130 clients surveyed around the world by the Chief Investment Office (CIO) of Deutsche Bank’s International Private Bank (IPB) say their investments should have a positive impact and 57% percent say the pandemic has contributed to that view.

Over half of the respondents (51%) say ESG investing can help manage risk in their portfolios and 74% say the pandemic has highlighted the importance of managing risk.

About 11% consider biodiversity loss as the most important environmental factor, and about half recognize the need to incorporate it into their investment decision-making due to its likely role in exacerbating ocean deoxygenation and land degradation, and accelerating climate change.

“ESG has become more and more important in investment decision-making,” Christian Nolting, chief investment officer, says in a report on the survey and the role of biodiversity risk in investments. “Biodiversity underpins many environmental, social and governance systems and biodiversity loss is therefore likely to be an increasing focus of public and investor concern.”

The survey also finds that women are more likely to say their investments should have a positive impact and to focus on the social pillar of ESG; millennials tend to be more focused on ocean pollution than their older counterparts; and while 54% of small and medium enterprises regard climate change as the main ESG issue in their business, only 26% have a dedicated ESG strategy.

The online survey of IPB clients aged 26 to 70 was conducted in April 2021. It included respondents from 10 countries or regions around the world: Belgium, Germany, Hong Kong, India, Italy, Singapore, Spain, Switzerland, the United Kingdom, and the United States.

The report was released a day after Deutsche Bank announced it has become the first bank to join the Ocean Risk and Resilience Action Alliance (ORRAA) as a full member, creating a partnership dedicated to bringing financial expertise and innovation to protect the ocean and the communities that depend on it.