Citywealth Quick Insight Series on Sustainability Trends in Wealth Management – Jeanne Collins, KBI Global Investors
This week’s Citywealth Quick Insight Series on Sustainability Trends in Wealth Management is dedicated to Jeanne Collins, Head of Responsible Investing Policy & Stewardship at KBI Global Investors.
How would you describe the current state of sustainable investing in private wealth — is it evolving from values-based to performance-driven?
Sustainable investing has matured in recent years beyond purely values or ethics. While many clients still want portfolios that reflect their values‑based preferences, the conversation today also includes expectations around financial returns, risk management, and long‑term value creation.
Several factors are behind this change. First, the quality, consistency and comparability of sustainability data have improved notably. Frameworks such as the International Sustainability Standards Board (‘ISSB’), alongside earlier initiatives, including TCFD, SASB, the EU Taxonomy and the Corporate Sustainability Reporting Directive (‘CSRD’)
have helped standardise how companies report on financially material sustainability risks and opportunities. This has made issues such as climate risk, supply‑chain resilience and governance quality easier to assess and compare across companies and regions. As a result, sustainability is increasingly viewed as a means of identifying long‑term growth opportunities in areas such as energy efficiency, water systems and climate‑adaptation technologies, rather than solely as an ethical consideration.
Second, there is now a longer performance track record. Ten years ago, sustainable strategies were relatively new and there was limited evidence to counter the perception that they came at the expense of returns. Today, a broad body of academic and industry research over the longer-term has generally found that ESG integration has not been associated with systematically lower returns, and in some cases has been linked to comparable or improved risk-adjusted outcomes. Of course, results vary by market environment and implementation approach.
This has increased confidence among wealth advisers and clients in ESG and responsible investing.
Third, regulation has reshaped expectations. Frameworks such as SFDR, the EU Taxonomy and CSRD have raised the bar for transparency, while the emergence of global baseline standards through the ISSB is helping to align sustainability reporting more closely with financial reporting. Together, these developments are intended to reduce greenwashing risk and to enable private clients to assess products using clearer and more comparable financial and sustainability metrics. As reporting requirements become more rigorous, ESG considerations are now a standard part of investment analysis and decision‑making.
How have recent regulatory or political developments (e.g. SFDR, SEC guidelines, green taxonomy) impacted ESG allocations and reporting standards?
Regulatory and political developments have played a major role in shaping both ESG reporting standards and capital allocation decisions. Since SFDR 1.0 took effect in 2021, it has pushed wealth managers to strengthen ESG due diligence, improve data quality, and ensure that product names and labels are closely aligned with underlying investment processes. The SFDR disclosure templates have made ESG characteristics and objectives more comparable, helping private clients better distinguish between strategies with genuine sustainability features or objectives and those that are more loosely sustainability‑themed.
While SFDR 2.0 was introduced in November 2025 with the intention of simplifying disclosures, introducing clearer product categories and reducing administrative burdens, there remains uncertainty around the final rules and their implementation timeline, which is currently expected to be 2027/2028. As a result, asset managers and investors continue to operate under the existing SFDR framework, for now.
Alongside SFDR, other regulatory initiatives have reinforced the focus on credibility and consistency in ESG products. In Europe, the EU Taxonomy has raised reporting standards by requiring companies to disclose the proportion of revenues, CapEx and OpEx aligned with taxonomy criteria, helping investors focus on strategies that can clearly demonstrate environmental contribution. In addition, ESMA’s fund name guidelines have increased scrutiny on the use of ESG and sustainability‑related terms in fund names, requiring a minimum level of sustainable investment or environmental and social characteristics, and the application of exclusions where relevant. These rules have further tightened the link between fund names, investment strategy and portfolio construction.
We believe regulatory developments have influenced fund flows, with SFDR classifications and fund‑naming rules shaping how products are designed, distributed and allocated. While institutional investors continue to signal strong intent to increase allocations to Article 8 and Article 9 strategies, private‑client flows have been more mixed in 2025. Some European investors have reduced allocations to pooled ESG funds in favour of customised mandates, even as overall assets in sustainable strategies remain resilient. This suggests that regulation has not reduced demand for ESG investing, but has changed how investors access it, with greater emphasis on clarity, credibility and alignment with individual objectives.
What ESG themes — such as biodiversity, energy transition, water security, or social equity — are capturing the most interest from private clients?
KBI Global Investors is primarily an institutional asset manager, with institutional relationships; however, a material portion of our assets come from distribution channels, partner networks and sub advisory relationships where the underlying investors are retail/private clients.
In our experience, private clients are showing strongest interest in ESG themes that combine clear environmental impact with tangible, long‑term economic relevance.
Energy transition is a core theme for investors, reflecting the need for investment in clean energy equipment, infrastructure around the delivery of clean energy and energy efficiency measures. It is a theme that resonates with private investors as they see the need for decarbonisation but also energy security in a world where geopolitics is increasingly to the fore. Water security is also rising sharply in private‑client portfolios. Increasing physical risk, ageing infrastructure and regulatory pressure on water quality have made water‑related solutions a structural investment theme, aligning with both sustainability objectives and stable utility‑like cashflows.
Biodiversity is still a small but growing area of interest as clients recognise its link to supply‑chain resilience and natural‑capital risk. We are seeing interest in biodiversity requests and questions around the way in which we deliver exposure to the theme. Our Circular Economy Strategy is a good exposure to biodiversity – something you might not expect.
Social equity continues to attract interest, particularly among younger clients who favour investments tied to healthcare access, workforce well‑being, and community outcomes.
So, although thematics have been out of favour for a couple of years, private clients are still gravitating towards ESG themes that have long-term structural drivers and that are measurable, science‑based and linked to real‑economy transition, with demand strongest where the investor believes that impact and alpha generation are achievable.
Are wealth managers seeing increased demand for impact-focused strategies that go beyond ESG screening – and how are they delivering them?
We would say yes – more investors are asking for impact focused strategies that do more than simply screen out ‘bad’ companies. They want their money to support businesses that genuinely help solve environmental and social challenges.
At KBIGI, we focus on solutions providers – companies whose products and services aim to improve water quality, cut carbon emissions, boost energy efficiency, or support sustainable infrastructure. This is mindset, investing in the enablers of solutions to the world’s challenges around resources, instead of relying only on ESG scores – which are only part of the overall picture.
In our Natural Resources strategies, we engage directly with the companies we invest in. Through direct engagement, we speak with management about issues like climate reporting, emissions targets and board diversity. We also engage on a collaborative basis with our investee companies. We join forces with other investors to push for stronger action in various areas that we identify as being important. This approach aims to support real improvements that benefit both society and long-term returns of the companies we invest in, so we see it as an important part of the investment process of the strategies we deliver, not just an ‘add on’.
How are family offices and trustees approaching sustainability within broader fiduciary and legacy planning conversations?
Based on our conversations with KBIGI clients and investors, we notice that sustainability is becoming a core part of fiduciary and legacy planning, not just a separate goal. This is especially clear with our family office clients and pension fund investors, who focus on long-term capital preservation and growth, risk management and making a positive impact.
For family offices, sustainability is closely tied to legacy. A study by Ocorian found that 80% of family office professionals now see ESG as part of their fiduciary duty, with next-generation wealth holders strongly shaping long-term strategy and values. In our experience, in Europe, this often means following a principles-based approach, supported by regulations like SFDR and a focus on stewardship and engagement. In the US, the focus tends to be more on fiduciary risk, resilience, and financial returns, shaped by legal requirements, but interest is growing as wealth passes to new generations.
For pension funds, sustainability is a key part of fiduciary responsibility. Trustees are paying more attention to how climate, social, and governance risks affect long-term funding and outcomes for members. This trend is supported by broader industry shifts. According to Morgan Stanley’s 2025 Sustainable Signals survey, 86% of global asset owners expect to increase their investments in sustainable assets, with strong expectations in North America, Europe, and Asia-Pacific.
Source; Why sustainable expertise is now a must-have for Family Offices – Agreus
What tools or metrics are most useful when assessing ESG risk and return, and are clients asking for more granular data?
When assessing ESG risk and return, we focus on tools and metrics that help distinguish financially material ESG issues from broader sustainability signals. ESG analysis is fully integrated into our research process and portfolio construction. Within our Natural Resources strategies, environmental, social, and governance factors are considered alongside traditional financial metrics in every buy, sell, and position‑sizing decision.
We combine third‑party ESG data with our own fundamental analysis by portfolio managers and analysts to develop proprietary ESG scores for each stock we monitor and invest in. At the company level, we use external ESG data from a data provider to assess metrics such as carbon intensity (Scopes 1, 2 and, where relevant, Scope 3), governance quality, health and safety performance, labour practices, and controversies. We complement this with our own assessment of the key negative impacts, and we engage directly with companies where we identify ESG risks.
To link sustainability performance more directly to investment outcomes, we use KBIGI’s Revenue Aligned SDG Score (‘RASS’), which assesses whether company revenues have a positive, negative, or neutral alignment with each of the UN Sustainable Development Goals. This helps translate ESG considerations into more concrete insights on long‑term risk and return.
Overall, clients are looking for evidence of real‑world impact rather than policy statements alone. This includes transparent reporting on engagement and voting, as well as measurable outcomes such as revenue alignment with the SDGs through tools like RASS. This level of analysis and reporting is something we can provide to clients on an ongoing basis.
Are there sectors or asset classes (e.g. green infrastructure, climate tech, sustainable private credit) that stand out as growth areas in 2025?
As a specialist global equity manager investing in solutions providers for some of the most critical resources needed on the planet, we are best positioned to comment on equities, and specifically, listed equity.
Within this sphere, we see investment in electricity networks, renewable generation, efficient food generation, water infrastructure and waste systems is being driven by electrification, urbanisation and tighter environmental standards. Within KBIGI’s Water, Energy Transition, Sustainable Infrastructure, Global Solutions and Circular Economy strategies, these themes are reflected in a focus on companies that provide essential services and enable resilience across energy and resource systems.
Climate and environmental solutions continue to attract capital, especially where technologies are commercial and scalable. Listed natural resources strategies focus on companies with proven solutions for energy efficiency, emissions reduction, water scarcity, and resource efficiency and recovery.
How are private clients balancing concerns about greenwashing with the desire to align investments with values?
Private clients are becoming more discerning in how they pursue values‑based investing, particularly as awareness of greenwashing has increased. Rather than stepping away from sustainable investing, many are refining how they express their values through their portfolios.
A key shift has been towards greater demand for clarity and evidence. Clients are asking more detailed questions about how sustainability claims translate into portfolio construction, company selection and stewardship. This includes a stronger focus on understanding the investment approach – for example, whether ESG considerations are integrated into fundamental analysis, applied through clear exclusion criteria, or pursued via specific sustainability themes – rather than relying on labels alone.
At the same time, clients are increasingly anchoring values alignment to materiality and real‑world outcomes. Many recognise that avoiding greenwashing does not necessarily mean holding only ‘perfect’ companies. Instead, they are comfortable with exposure to companies facing sustainability challenges where there is credible evidence of transition, engagement and accountability. This has elevated the importance of active ownership, voting and engagement as tangible ways to demonstrate alignment with client values.
Regulatory developments have also played a role in shaping client behaviour. Heightened scrutiny around sustainability claims – particularly in Europe – has reinforced client preference for products with clear, transparent objectives and naming conventions, and for managers who can explain how portfolios meet regulatory and disclosure expectations. This has led many clients to favour simpler, well‑defined strategies over more ambiguous or marketing‑driven ESG narratives.
Finally, private clients are balancing values and greenwashing concerns by accepting trade‑offs more explicitly. Rather than expecting sustainability to be cost‑free or perfectly measurable, clients increasingly acknowledge tensions between financial returns, impact ambitions and data limitations. As a result, they are focusing on alignment with their core priorities – such as climate action, biodiversity or social outcomes – while seeking assurance that sustainability considerations are applied consistently and credibly across the investment process.
In practice, this means private clients are not retreating from values‑aligned investing. Instead, they are moving towards more informed, nuanced and evidence‑based approaches that prioritise transparency, governance and accountability over broad or unsubstantiated sustainability claims.
In what ways are you seeing generational shifts influence sustainable investment decisions within families or multigenerational wealth structures?
Many of our clients and prospects are not just looking for ESG as a label; they are looking for financial returns combined with impact, so that means a focus on how money is used and what it achieves over time. When families talk about sustainability, the focus is shifting to long-term resilience, real-world impact, and responsibility across generations, instead of short-term performance. This shift often sparks deeper questions about climate risk, resource scarcity, governance quality, and how these issues are considered in investment decisions.
At KBIGI, we have a global client base, and we notice a move towards greater transparency and accountability across all regions. Next‑generation clients want clearer evidence of how ESG considerations influence stock selection, engagement priorities and risk management, rather than high‑level commitments. This aligns closely with the KBIGI approach, where ESG factors are fully integrated into fundamental analysis and are supported by active ownership, engagement and voting.
What innovations or frameworks do you believe will define the future of ESG and impact investing for private wealth?
The future of ESG and impact investing for private wealth will be shaped less by new labels and more by the institutionalisation of sustainability within mainstream investment analysis. In our view, three developments will be particularly defining.
First, the emergence of global sustainability reporting standards – led by the ISSB – marks a critical turning point. The ISSB standards, IFRS S1 and IFRS S2, are designed to bring consistency, comparability and decision‑usefulness to sustainability disclosures, in much the same way that IFRS has done for financial reporting. Whilst this is the hope, we don’t know yet if this will be the reality. Only time will tell. By focusing on sustainability‑related risks and opportunities that could reasonably affect cash flows, access to finance or cost of capital, these standards help anchor ESG analysis firmly within financial materiality rather than marketing narratives.
Second, we see growing innovation in how sustainability information is embedded into investment decision‑making and stewardship, rather than treated as a separate overlay. Improved corporate disclosure – supported by ISSB alignment and more consistent data from providers – allows investors to assess not just static ESG scores, but the direction of travel of companies, including governance quality, capital allocation and transition credibility. This enables more nuanced portfolio construction and underpins more targeted engagement and voting, which many private wealth clients increasingly view as a core expression of impact alongside capital allocation.
Third, frameworks that link sustainability outcomes to real‑world impacts and accountability are becoming more influential. This includes greater alignment between sustainability reporting and financial statements, particularly around climate‑related risks, assumptions and uncertainties. The direction of regulatory and standard‑setting initiatives suggests that climate and other sustainability factors will increasingly be reflected in financial disclosures themselves, reinforcing the idea that these issues are not peripheral, but fundamental to long‑term value creation. For private wealth investors, this convergence strengthens confidence that ESG and impact considerations are grounded in robust analysis rather than aspirational claims.
Taken together, these developments may support further standardisation and integration over time. As sustainability reporting matures to mirror the credibility of financial reporting, private wealth investors will be better equipped to align portfolios with their values while maintaining a clear focus on risk, return and long‑term outcomes.
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