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A scarcity of clear requirements and definitions and the threat of greenwashing have been cited as two of the primary limitations to monetary advisers recommending ESG investments extra typically to purchasers.
Regardless of a rising curiosity in ESG, 56% of advisers imagine the dearth of readability about ESG funding is holding again their development, a brand new survey has discovered.
Analysis for FE Fundinfo’s Monetary Adviser Survey discovered that 55% of advisers stated that ‘greenwashing’ fears had been stopping them from selling ESG funds.
Greenwashing happens when companies promote funds as assembly ESG standards however in actuality they fail to satisfy ESG aspirations.
The survey discovered that the overwhelming majority of advisers (72%) provided ESG propositions to purchasers, a 7% improve on the previous 12 months. Practically eight in 10 advisers (79%) additionally stated purchasers had been exhibiting a rising curiosity in ESG investing.
Shopper understanding of ESG investing is usually poor, nonetheless, and that is additionally a “important barrier” to ESG development, in line with advisers. Most respondents say their purchasers have just some understanding of ESG and the assumed degree of consumer understanding has fallen since final 12 months.
Christoph Dreher, head of ESG product group at FE fundinfo, stated: “It’s clear that whereas curiosity in ESG investing is at an all time excessive and, as a subject, is fuelling many conversations between adviser and consumer, the business must do extra to form understanding and supply related info.
“Whereas the business has taken nice strides in recent times, consumer and adviser understanding of ESG investing is stopping higher adoption of ESG investing and the market wants to supply extra training and knowledge that’s accessible and simple to grasp to be able to help this curiosity.”
The survey discovered that many advisers are utilizing their very own strategies to present purchasers extra details about ESG. Practically half (49%) stated they used a number of third social gathering sources, 21% used info offered by fund teams, 15% use quantitative ESG scores, whereas 9% use qualitative ESG scores. Some 2% in the meantime use nationwide Ecolabels.
Whereas limitations are important the survey discovered that typically the outlook for ESG investing was largely optimistic amongst monetary advisers. Some 66% of advisers are actually investing extra consumer cash into ESG propositions than they had been final 12 months, whereas 33% of advisers now take into account themselves ‘lively’ promoters of ESG funds, up 6% from the earlier 12 months.
• The 2022 Monetary Adviser Survey was performed in November and December 2021. It consisted of 60 questions and was accomplished by over 200 UK-based monetary advisers. https://www.fefundinfo.com/en-gb/landing-page/adviser-annual-survey-report-2022/
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