Citywealth Quick Insight Series on Sustainability Trends in Wealth Management – Simone Borsetti, MainStreet Partners
This week’s Citywealth Quick Insight Series on Sustainability Trends in Wealth Management is dedicated to Simone Borsetti, Research Associate at MainStreet Partners.
How would you describe the current state of sustainable investing in private wealth — is it evolving from values-based to performance-driven?
Sustainable investing in private wealth feels less like a transition and more like a refinement. Values still initiate the discussion. Many investors begin with exclusions or legacy considerations. What has changed is what happens next.
The conversation quickly becomes analytical. Investors want to understand how environmental and social dynamics shape competitive positioning, cost structures, and long-term relevance. Sustainability is no longer treated as a parallel discussion. It is examined through the same lens as any other investment driver.
For instance, energy transition exposure is evaluated not simply as a climate theme, but in terms of demand visibility, capital intensity, and policy direction. Water stress or biodiversity loss are assessed for their potential to disrupt supply chains or alter operating costs. These are strategic variables, not moral abstractions.
The real evolution is that sustainability has moved from preference to investment thesis. It is increasingly embedded in how opportunities are underwritten rather than applied as a secondary filter.
How have recent regulatory or political developments (e.g. SFDR, SEC guidelines, green taxonomy) impacted ESG allocations and reporting standards?
Regulatory developments have shifted sustainable investing from a label driven market to a far more rules based and evidence-based environment.
When SFDR was first introduced, its classifications clearly influenced capital flows, with strong demand for Article 8 and 9 strategies. Over time, inconsistencies in interpretation became evident. The ongoing review of SFDR, together with ESMA’s guidance on the use of sustainability-related terms in fund names, points towards clearer product categories and stricter alignment between sustainability claims and portfolio composition. With further changes expected over the next few years, many managers are already reassessing disclosures and positioning in anticipation of a more prescriptive framework.
The EU Taxonomy has added another layer of discipline by defining what qualifies as environmentally sustainable. Even where alignment remains partial, it has pushed managers to analyse revenue exposure, capital expenditure plans, and transition strategies in a more structured way.
In the UK, the SDR and the anti-greenwashing rule reinforce the same direction. Sustainability claims now require a clear evidentiary basis, leading to more rigorous due diligence by wealth managers and fund selectors. From a fund assessment perspective, this means testing the consistency between stated sustainability objectives, portfolio construction, and reporting practices rather than relying on regulatory classifications alone.
These developments have narrowed the gap between ambition and implementation. Marketing language carries less weight on its own, and credible data and consistency increasingly drive allocation decisions.
What ESG themes — such as biodiversity, energy transition, water security, or social equity — are capturing the most interest from private clients?
Energy transition remains the dominant theme for private investors. It is no longer viewed simply as a sustainability allocation, but as a structural capital allocation theme. Electrification, grid infrastructure, storage, and energy efficiency are increasingly embedded in long-term strategies, particularly in private markets where assets are tangible and demand visibility is clearer.
At the same time, biodiversity and nature-related themes are gaining momentum. Nature loss is now discussed not only in ethical terms, but in relation to supply chain exposure, land use constraints, and asset durability. As risk frameworks around biodiversity mature, investors are becoming more comfortable allocating to sustainable land use and nature-based solutions.
Water security and climate adaptation are also attracting attention because of their direct implications for asset performance. Physical climate risk and resource scarcity can affect valuations, insurance costs, and infrastructure reliability.
Are wealth managers seeing increased demand for impact-focused strategies that go beyond ESG screening — and how are they delivering them?
There is a clear appetite for strategies where the intention is explicit. Investors are less interested in broad ESG integration claims and more focused on whether a strategy is deliberately designed to contribute to specific outcomes.
Private markets are particularly suited to this approach because the link between capital and activity is more direct. When backing a company or infrastructure asset, it is possible to define from the outset what objective the investment is targeting and how progress will be assessed over time.
In our assessment of private market strategies at MainStreet Partners, a key differentiator is whether impact is embedded in the investment process itself. This means evaluating how objectives are defined at origination, how they influence investment selection, and how performance is monitored throughout the holding period. Clear baselines, measurable indicators, and internal accountability mechanisms tend to distinguish structured impact strategies from those where impact is presented primarily at reporting stage.
The shift is therefore not simply towards “more ESG,” but towards strategies where intentionality and implementation are demonstrable and consistent.
How are family offices and trustees approaching sustainability within broader fiduciary and legacy planning conversations?
Sustainability is increasingly being discussed as part of long-term stewardship rather than as a technical ESG exercise.
For many family offices, the central question is how capital can remain relevant and resilient across generations in a world that is changing structurally. Climate transition, resource constraints, demographic shifts, and technological disruption are not viewed as isolated risks, but as forces that will shape economic growth and asset values over decades.
Trustees therefore assess sustainability in terms of durability. They consider whether business models can adapt to regulatory and market shifts, and whether portfolios are positioned for a different economic environment. The focus is on preserving purchasing power and long-term relevance.
In legacy discussions, sustainability also provides a common language across generations. It helps define how wealth should be managed responsibly while continuing to meet financial objectives.
What tools or metrics are most useful when assessing ESG risk and return, and are clients asking for more granular data?
In private markets, the push towards greater standardisation of ESG data has been a meaningful step forward. Reporting was historically fragmented and largely qualitative, which made comparisons across managers difficult. Initiatives such as the ESG Data Convergence Initiative have helped establish more consistent core indicators, including emissions, diversity, workplace safety, and governance metrics, strengthening benchmarking and due diligence.
Yet even with improved metrics, assessing ESG risk in private assets cannot rely solely on portfolio data. Transparency is uneven, and during fundraising phases a fully built portfolio is often not yet available. For this reason, our ESG assessments of private asset funds at MainStreet Partners follow a holistic framework that evaluates three dimensions: the general partner’s governance and sustainability commitment, the integration of ESG at strategy level, and the alignment of the portfolio with stated sustainability objectives. This structure enhances transparency and comparability across funds, while also allowing for a robust assessment at launch stage, before the portfolio is fully deployed.
At the same time, investors are increasingly requesting more granular, asset-level information as portfolios mature. Aggregated fund metrics are no longer sufficient. There is growing interest in tracking trends over time and understanding how ESG performance connects to operational progress and long-term value creation.
Are there sectors or asset classes (e.g. green infrastructure, climate tech, sustainable private credit) that stand out as growth areas in 2025?
In 2025, green infrastructure and energy transition clearly stood out as structural growth areas within private markets.
Global energy investment surpassed 3 trillion dollars annually last year[1], with roughly two thirds allocated to clean energy technologies, grid infrastructure, storage, and electrification. Solar and battery storage continued to attract substantial capital, supported by policy frameworks and improving cost competitiveness. This translated into sustained fundraising momentum for renewable platforms, grid modernisation projects, and energy efficiency strategies.
Digital infrastructure also gained traction, particularly data centres. Investment volumes increased materially, driven by AI adoption and cloud expansion[2]. These assets sit at the intersection of digitalisation and energy demand, linking them indirectly to grid capacity, power sourcing, and decarbonisation strategies.
How are private clients balancing concerns about greenwashing with the desire to align investments with values?
There is a clear shift from relying on ESG branding to scrutinising underlying evidence. Investors recognise that sustainability labels alone do not guarantee alignment, so the focus has moved towards transparency and consistency.
This means analysing portfolio composition, investment processes, and reporting quality rather than relying on classifications. If a strategy claims environmental alignment, investors expect to see coherent exposure at holdings level and a clear methodology supporting those claims.
There is also greater demand for traceability. Rather than accepting broad narratives, investors increasingly expect measurable indicators and evidence of progress over time.
This has led to deeper due diligence rather than a retreat from sustainable allocations.
In what ways are you seeing generational shifts influence sustainable investment decisions within families or multigenerational wealth structures?
Generational dynamics are increasingly visible in sustainable investment discussions. In many families, younger members approach sustainability as a baseline expectation rather than a specialist allocation. Environmental and social considerations are seen as part of responsible capital management.
Older generations often prioritise capital preservation, income stability, and track record. This does not necessarily create resistance, but it shapes the framework of the discussion, with a stronger emphasis on discipline and financial robustness.
What innovations or frameworks do you believe will define the future of ESG and impact investing for private wealth?
One of the most significant developments will be the consolidation of reporting standards around global frameworks. The ISSB standards, particularly IFRS S1 and S2, represent an important step towards consistent sustainability disclosure.
For private wealth, comparability has historically been a challenge. As more companies align with common standards, sustainability data becomes easier to interpret and integrate into financial analysis.
The real shift will occur when this information is treated no differently from revenue growth or leverage ratios. Once sustainability metrics are reliable and comparable, they naturally become part of valuation and portfolio construction discussions.
At that point, ESG will not sit in a separate category. It will simply form part of how investment quality is assessed.
[1] The Renewable Energy Institute: “Global Energy Investment Hits Record High: Key Takeaways from the IEA’s 2025 Report”
[2] Boston Consulting Group: “Private Equity Infrastructure Investment Poised for Renewed Growth Amid Evolving Market Dynamics”
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