Standard Chartered deploys ESG product tool for private banking investors

Standard Chartered Private Bank, the private banking division of Standard Chartered, has launched ESG Select - a new evaluation process to be applied on wealth solutions that seek to be positioned as a sustainable or environmental, social and corporate governance (ESG) product on the Standard Chartered platform.

The methodology behind ESG Select is tailored to each asset class, with funds and discretionary portfolio solutions following a similar assessment process, while bonds and structured products are separately assessed on different sets of criteria.

The underlying premise is to benchmark against established frameworks that are aligned to the bank’s positions and to ensure that an ongoing monitoring and review are in place. The entire process is supported by various stakeholder groups within the bank, “allowing for the most relevant input and expert advice”.

We have a two-step approach when it comes to reviewing structured products to qualify under ESG Select

“We believe that for finance to catalyse social impact, a thorough and systematic framework is critical in giving clients confidence,” Eugenia Koh (pictured), head of sustainable investing and strategic engagement at Standard Chartered Private Bank, told SRP. “We have a two-step approach when it comes to reviewing structured products to qualify under ESG Select. First, we look at the credentials of the issuers and their framework with respect to how the sustainable finance assets are allocated. Second, we look at the ESG ratings of underlying companies.”

According to Koh, qualifying equities will be subject to a further check against a list of excluded sectors, “which are aligned to our position statements”.

ESG assessment

The bank’s move responds to sustainable investing becoming a mainstream consideration for many investors with ESG products also becoming increasingly accessible.

According to Koh, it is timely and critical that ESG products are properly evaluated to manage the potential negative impact of ESG risks and, at the same time, spot opportunities to drive positive impact.

“We have seen increased interest from many of our high-net-worth clients to include a sustainable element in their investment portfolio,” she said, adding, “our open architecture approach, which is product agnostic, coupled with our Impact Philosophy allow our bankers to recommend ESG products that address clients’ impact needs”.

“Launching ESG Select will help us address green washing concerns and we are confident that our clients will benefit from a more rigorous and systematic investment decision journey.”

Standard Chartered started incorporating ESG scores into its wealth management investment advisory trade notes for equities and fixed income since the third quarter of 2019.

The launch of ESG Select adds to the bank’s sustainable investing proposition, allowing clients to factor ESG considerations into their investment decisions.

ESG Select also applies to ESG funds, which Standard Chartered Bank offers via its wealth management suite of products to retail banking clients.

Standard Chartered is an active issuer and distributor on a number of Asia Pacific markets including Singapore (37 live products/ US$19.5m), Malaysia (20 products/US$444.9m), and Taiwan (260 live products worth US$702m), as well as the UK and Ireland, according to SRP data.