Interest in ESG (environmental, social and governance) has resulted in a raft of ESG-themed investment funds/portfolios being made available to advisers and their clients over the last 12-18 months. The Future of Advice – Beneath and Beyond, a new paper from independent analysts AKG and co-sponsored by wealth managers Charles Stanley, reveals that three in five (60 per cent) advisers are now factoring in ESG related questions when speaking to clients and undertaking fact finds. A further one in five (22 per cent) expect to introduce ESG related questions in the next 12 months.
This is in the face of growing interest amongst some consumers, with investable assets of more than GBP100,000, who are reviewing their investments to ensure they are sustainable and socially responsible.
Nearly a quarter (24 per cent) of this group of respondents have independently reviewed their investments to ensure that they are sustainable and socially responsible and over a fifth (21 per cent) have done so with the support of an adviser.
Moving forward the ESG market will need to mature and it will be important for advisers to establish manager credentials and approaches and also to get a better understanding of key differentiators and performance drivers/dynamics.
According to John Porteous, Group Head of Distribution at Charles Stanley: “While awareness and appetite for socially responsible investing are increasing, we still need to complete the shift from niche investing to the mainstream. One of the main misconceptions is that it doesn’t generate such attractive yields, but our analysis shows that investors have been significantly more likely to generate outperformance from ethical or sustainable funds than from standard funds. We need to provide the confidence that this type of investing is delivering for people’s financial future as well as for the global good.”