Risk-reward: Is it the adviser's role to promote sustainable investing?

Financial Advisory

24 November 2022

Advisory DistributorsConsumer DutyESGFinancial AdvisoryInvestmentsSimplifysustainable

Expert: Andy Ford & Fabian Wiesner Facilitator: Helen Clark


  1. There is a need for more education around ESG on a clear and common language basis for clients and also advisers around the key concepts and how ESG is being applied to investments
  2. Providers can assist in this area as they generate further collateral on the subject and Aviva are keen to assist in this area
  3. Only the passionate clients are concerned with greenwashing and what this actually means, the majority are largely unaware of the implications
  4. With no global view on greenwashing and how this should be approached it’s difficult for advisers to provide a balanced view and for most B-corps this is simply a box-ticking exercise.


Advisers are still not clear on ESG and what it really means, even though this subject was extensively covered through online courses and other training during the pandemic period.

The market has been flooded with ESG literature and information but there is no one standard approach.

Advisers are now recommending ESG as standard within investment strategies and only those clients who have strong feelings on environmental issues are likely to question or challenge aspects of a recommended ESG based investment.

Despite all the publicity and the literature around ESG, it was strongly agreed that clients themselves don’t understand or are necessarily concerned about the subject. ESG is also seen as a subjective subject and it was felt advisers are unable to lead on this subject. They are dependent on the fund investment reports and sufficient and clear information to answer client queries as they arise in order to manage expectations and many still don’t feel confident when answering.

This is more evident for independent firms who are looking at whole of market, as their clients will have a more diverse investment range to consider.

It was agreed that while the majority are concerned about climate change and the environment, they trust fund managers to include the highest level of impact while balancing this with investment performance.

All firms felt that ESG will become part of the standard governance for investment within the next 5 years and will not be seen as a separate issue as it is at present.

An example quoted where this is already standard was Dynamic Planner, which includes a Sustainability Questionnaire as part of the client’s risk assessment, giving the adviser a useful insight to the client’s view at the start of the advice journey. This helps provide an early and easier conversation with the client before recommending suitable investments against their level of risk. 

Key takeaways:

  • ESG needs to be aligned with Consumer Duty requirements, i.e. what is of value from ESG to the client and what does the client actually need to know? Also, this needs to be communicated to client in plain and clear language so the relevant investment decisions against risk levels can be agreed
  • It’s believed ESG will become a non-topic within the next 5 years as it becomes part of the standard governance so simplifying the approach would benefit everyone as regulation requirements continue to increase
  • It is expected ESG will become part of standard Governance within the next 5 years and accepted as the norm for investment standards rather than treated as a separate issue