A majority of clients are now interested in sustainable investments, a new survey reveals, with 72% of financial advisers now offering such options. The research found that 69% of advisers are now directly asking about sustainable investing in their fact finding. According to the Professional Adviser's survey of 150 financial advisers on sustainable investing, up to 62% of clients aged 40-60 expressed an interest in sustainable and responsible investment. In addition, close to one in two high net-worth individuals asked about environmental, social and corporate governance (ESG) investment options.
Interest in ESG investments has grown recently as climate change and sustainability become a part of the news. This class of investments seeks positive returns and long-term positive impact on society, the environment and the performance of the business and is now very much a part of the industry lexicon.
There is no widely accepted single definition of sustainable investing but according to the Global Sustainable Investment Alliance (GSIA) it can encompass seven main activities. These are ESG integration, sustainability themed investing, norms-based screening, positive best-in-class screening, negative/exclusionary screening, corporate engagement and shareholder action, and impact/community investing.
This is a broad set of activities and it can involve putting a special value on companies that manage their carbon footprints, ensure labour laws are upheld throughout the value chain, and many other social and environmental benefits. In fact, nine out of ten advisers surveyed by Professional Adviser said that clients who invest in sustainable funds cite environmental or societal concerns as their main objective. Only 2% of advisers said they thought clients chose these investments searching for higher returns.
To find out more about sustainable investing, click here to read Architas and Professional Adviser's guide, ‘The Value of Values'