Nicolas Moreau, CEO of HSBC Asset Management, has said the firm needs to be more outcome driven on environmental, social and governance (ESG) investing as it continues to expand its ETF product range.
Speaking at the Alfi London conference, Moreau said the asset manager was working hard to define what it stands for in respect to its ESG products, whether that is targeting the Paris Aligned Benchmarks or being a “champion of the transition” in a bid to align with investors’ values.
“What is difficult is to define what you mean by ESG product. Is it a product that has a lower carbon consumption than the benchmark, or is that you want to be the champion of the transition, or do you want to be Paris aligned? The work we are doing right now is defining what we stand for,” he said.
“We need to be more outcome driven in the way we define our portfolios. We are talking jargon and we need to be accessible to people.”
He added it was necessary as investors expect a more direct and customisable approach to investing.
“There is an evolution from the mutual fund restriction instruments to a customised approach where the client will be able to say, ‘I want to influence these companies, I want to invest in these areas and I want to have my own index’. That is something we see coming,” he said.
His comments come after the asset manager unveiled its first fixed income ETFs with the launch of two ESG corporate bond ETFs, the HSBC Bloomberg EUR Corporate Sustainability Bond UCITS ETF (HEUC) and the HSBC Bloomberg USD Corporate Sustainability UCITS ETF (HUSC).
Earlier this month HSBC AM expanded its climate ETF range to four with the launch of a Japanese equity strategy, the HSBC Japan Climate Paris Aligned UCITS ETF (HPJP).
Moreau added the business is working hard to recruit young talent to its sustainability team to participate in a “once in a generation transition”.
“We see it as a huge fight because it takes time to train people. Experience is very much valued by investors and that I where we are spending most of our time,” he said.
HSBC AM has undergone an ESG recruitment drive this year. In July, the firm beefed up its sustainability team with the appointment of Erin Leonard as global head of sustainability, while global head of research and insights Stuart Kirk was named global head of responsible investments.
In an interview with ETF Stream earlier this month, Kirk warned private consortiums or certain hedge funds – which may have less concern about ESG outcomes – could fill the financing gap left by fleeing institutional investors.