Nearly half of advisers think asset managers should be fined for greenwashing while a third say there is too much hype around ESG, new research shows.
A CoreData Research survey of 300 UK financial advisers conducted in July found 46 per cent agree that asset managers should face fines for greenwashing. Just one in 10 (10 per cent) disagree that managers should be fined, while about four in 10 (43 per cent) are undecided on the issue. Advisers focusing on HNW clients (48 per cent) are more inclined than their mass market focused peers (40 per cent) to think managers should face monetary penalties for greenwashing.
The desire for a tougher set of rules for asset managers comes as advisers encounter increasing difficulty navigating ESG regulations. Four in 10 (40 per cent) say they are confused by the growing array of ESG regulations. Levels of confusion are higher among independent advisers (44 per cent vs. 27 per cent restricted) and those focusing on mass market clients (49 per cent vs. 39 per cent HNW).
But despite confusion over ESG regulations, some advisers are reluctant to equip themselves with qualifications. More than four in 10 (41 per cent) disagree that all advisers should have ESG qualifications. This compares to just 25 per cent who agree. Advisers focusing on mass market clients are more resistant — half (50 per cent) disagree advisers should have qualifications compared to 38 per cent of their HNW-focused peers.
The study also shows advisers strongly disagree ESG is a temporary trend. Just 13 per cent think ESG is an investment bubble, while only 8 per cent think ESG funds will perform poorly when the pandemic ends.
But while advisers dismiss the idea that ESG is a bubble, some feel there is excessive noise around the space. A third (32 per cent) say there is too much talk about ESG. This proportion increases to nearly four in 10 mass market focused advisers (37 per cent vs. 28 per cent HNW). Independent advisers are also more inclined to think there is too much talk about the subject (32 per cent vs. 25 per cent restricted).
Elsewhere, the research highlights a growing tendency among advisers to focus on the social component of ESG. Nearly three in 10 (28 per cent) agree they are now paying more attention to the S in ESG compared to 21 per cent who disagree and 51 per cent who are undecided.
“These findings suggest advisers want more ESG funds with a social purpose,” says Andrew Inwood, founder and principal of CoreData. “This is likely a consequence of the pandemic which has seen social factors such as human capital management take on more importance. For fund managers, the ability to clearly explain how less quantifiable social performance targets will be met and monitored will be key.”