Simply 1% of monetary advisers and wealth managers “utterly belief” the sustainability claims made by funds, in line with a brand new report.
The Affiliation of Funding Firms surveyed 200 intermediaries.
They have been requested to charge their belief in funds’ sustainability claims on a scale of 1 – don’t belief in any respect – to five, which means they utterly belief the claims.
Just one% responded with a ‘5’ rating, whereas the bulk – 56% – responded with ‘3’, indicating restricted belief.
Fears of ‘greenwashing’ may very well be allayed by extra particular data, together with examples, they stated.
One wealth supervisor stated: “I would wish to see actual examples within the portfolio. I would wish them to say, ‘We checked out firm X final 12 months. We actually, actually favored it. It scored very well on all our stuff however then after we considered it from a sustainable viewpoint, we did not put money into it.’”
Regardless of their scepticism about ESG claims, monetary advisers and wealth managers remained supportive of ESG investing. About four-fifths agreed that “investments ought to make a constructive distinction in addition to a monetary return.”
Nick Britton, head of middleman communications on the AIC, stated: “Advisers and wealth managers are keenly conscious of the dangers of greenwashing. Within the gentle of this, the FCA’s determination to impose stringent guidelines on how funds current their sustainability claims seems to be well timed, and it’s one we totally assist.”
The Metropolis watchdog final week introduced plans to clamp down on so-called ‘greenwashing’ – false claims that funds and monetary merchandise abide by strict ESG credentials.
The FCA proposed a bundle of measures in CP22/20 together with funding product sustainability labels and restrictions on using phrases akin to ‘ESG’, ‘inexperienced’ or ‘sustainable.’ The watchdog may also have a look at the function of monetary recommendation in ESG suggestions.
Mr Britton stated: “ESG investing has confronted an ideal storm this 12 months, and this has clearly affected expectations about efficiency and threat.”
He added that market falls, increased inflation and the conflict in Ukraine have made many advisers and wealth managers extra cautious of investing in sustainable funds within the quick time period, “although they nonetheless anticipate demand for ESG investing on the whole to extend over the subsequent 12 months.”
• The web survey of 200 retail intermediaries (109 monetary advisers and 91 wealth managers) was commissioned by the AIC and carried out by Analysis in Finance. It was adopted by in-depth interviews with 10 chosen respondents (seven monetary advisers and three wealth managers). The fieldwork was carried out between 11 and 31 July.