Bringing you live news and features since 2006 

Greenwashing fears as two-thirds of advisers fear a backlash may damage reputation

RELATED TOPICS​

Over two-thirds of advisers are worried about the reputational risks of greenwashing and a potential backlash if they recommend products that are later accused of ‘greenwashing’, new research from Boring Money shows.

Boring Money’s Sustainable Investing 2021 report reveals greenwashing is one of the biggest concerns for financial advisers when it comes to ESG. A total of 69 per cent of advisers cite it as a concern for their business, with one in five (20 per cent) saying they are ‘very concerned’ about the risk and a further 49 per cent identifying as ‘somewhat concerned’.

The report, supported by Morningstar, also shows retail investors have significant appetite for excluding controversial holdings and many say that they’d consider moving money if they found it were invested in stocks linked to sectors they were opposed to.  

The biggest concerns are weapons, tax avoidance and animal testing. Consumer sentiment towards fossil fuels appears to have evolved and the report notes a much higher tolerance in 2021 for engagement, rather than exclusion. Just 24 per cent of investors would definitely want to move their money if they knew it was exposed to fossil fuels.

Despite the significant consumer appetite for sustainable investing, concerns over transparency and the danger of greenwashing are a concern for both advisers and investors. Many investors report feeling unable to see sufficient detail to ascertain a fund’s credentials. The sentiment is echoed by advisers, with just 33 per cent of advisers agreeing that current ESG fund communications are good enough to support the conversations they need to have with clients.

Boring Money CEO, Holly Mackay, says: “As personal financial concerns continue, investors’ appetite to prioritise sustainable investing has slightly fallen in 2021. In part we can attribute this to much greater concern about greenwashing. Appetite for positive global change has not diminished but trust in the sector to be the agents of this change has fallen, as consumers struggle to find the proof points they require. Advisers are even more concerned about the reputational risks of inadvertently misleading clients. The sector needs to put more effort, resource and time into thinking about how to communicate ESG credentials to clients. Simply using the same old broken factsheet template isn’t helping anyone. Lengthy annual PDFs are a good start but are too hard to find and digest for the majority.”

Morningstar Director of Client Solutions, Anastasia Georgiou, adds: “We understand that with ESG investing, investors and advisers want to see evidence of both impact and returns, and concerns over greenwashing mean data and analytics are more important than ever. We hope that Morningstar’s independent sustainability framework can be a tool for advisers to go beneath the surface, with both qualitative and quantitative screens, as they help clients find investments that meet their long-term risk and ESG considerations.”

 

Latest News

MerQube has announced the appointment of Dave Mueller as Chief Financial Officer. Mueller brings 17 years experience operating in corporate..
Northern Trust Asset Management (NTAM), has announced that David Abner is joining as Head of Global ETFs and Funds...
Nvidia’s market cap surge to more than USD3 trillion making it the second most valuable company in the world almost..
BlackRock writes that May marked the highest inflow month of the year for both rates and high yield (HY) ETPs,..

Related Articles

Darren Johnson, Komainu
Custody specialist, Komainu, was launched in 2018 as a joint venture between Nomura, digital-asset investment manager, CoinShares and blockchain business,...
Stuart Chaussee
In January this year, global data and business intelligence platform, Statista reported that there are now more than 8000 ETFs...
Ethereum coin
Last week saw Australia launch spot bitcoin ETFs, with Matteo Greco, Research Analyst at Fineqia International, writing that Monochrome Asset...
Timothy Rotolo, Range Funds
In 2023, Timothy Rotolo launched his business, Range Fund Holdings, the parent company for Range Indices and Range ETFs, followed...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by