ESG is playing an increasingly important role for independent financial advisers (IFAs) when building portfolios for clients, according to a new study.
Over 80% of IFAs said that it’s important, including nearly a third that considers it ‘very important’.
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Last year, only 65% described this as important, noted private equity investment manager Foresight Group, which compiled a survey of 112 professionals.
The uptake seems to be slower among UK retail investors, as 12% of IFAs said that over half of their clients now express a preference for ESG investing, compared to 9% in 2020.
Financial intermediaries remain conscious of their role in the move towards sustainable investing, with 45% of respondents saying that educations sessions would encourage them to suggest ESG funds more frequently to clients.
But the greatest challenge is the lack of an industry-wide definition of ESG investing, according to 49% of IFAs. A fifth of respondents also cited the lack of an industry-wide gold standard for ESG criteria and a lack of transparency when reporting ESG activity.
“We are enthused to see that IFAs are increasingly open to joining the global movement towards sustainable investing,” said Mark Brennan, partner at Foresight Capital Management.
“Major steps forward have been taken this year in helping companies and investors define what qualifies as a sustainable economic activity or investment, although the investment industry is still some way from providing standard definitions.”