More than two in five (43%) independent financial advisers (IFAs) in the UK believe that the biggest barrier to recommending ESG investment options is their clients’ lack of familiarity with the concept, a new study by Foresight Group has found.

The research, conducted among over 100 IFAs, revealed that the figure is significantly higher than the 29% who said the same in 2020.

Foresight’s research also found that nearly two in five (39%) IFAs this year cited confusing terminology surrounding ESG investment as a barrier.

However, the findings indicated that a substantial minority of investors are still questioning whether a focus on ESG harms investment performance, with 31% of IFAs referring to clients having concerns about performance in relation to ESG.

Despite this, a majority (72%) of IFAs believe incorporating ESG considerations into investment strategies does not usually impact financial returns negatively though, while just 13% said this is the case, and the remaining 15% said they do not know.

Foresight’s findings also highlighted a need for more information to help promote sustainable investing to clients. Nearly half (45%) of IFAs said education sessions would encourage them to suggest ESG funds more frequently, and this was followed by learning tools (40%), available case studies (32%) and testimonials (11%). Only 11% said none of these would help.

Partner at Foresight Capital Management, Mark Brennan, commented on the findings: “As responsible investing increasingly becomes part of the mainstream, there is still much to do in terms of raising awareness and helping IFAs to educate and inform clients of the options available to them.

“We pride ourselves on being a sustainability-led investment manager, and we are certainly prepared to take on responsibility in helping the investment industry to shape sustainable investing in the future.”

Share Story: