The adoption of ESG by financial advisers is uneven across the UK. Many are still in reactive mode or deal with ESG with a compliance mindset. However, a small but growing number are making genuine efforts to educate clients.
A key aim for this group of ‘ESG embracers’ is to help investors move away from an ‘old’, exclusions-based, approach. They encourage a ‘new’ ESG mindset where the emphasis lies not just on avoiding problematic companies but also on finding the ones developing solutions to environmental and social challenges.
Some ESG-embracers are inviting clients to consider ESG investing alongside lifestyle changes. The importance of ESG investing relative to minimising platic usage or air travel varies significantly by age and income level, according to our reseach.
How are these discussions translating into product choices? Advisers tend to tread carefully when it comes to implementing changes, as we can see from brand awareness and fund flows, and asset managers should expect evolution rather than revolution. However, more client-friendly information on how investments can produce environmental and social impact might tilt the balance towards ‘new’ ESG investing in the next few years.