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50% of advisers now offering ESG advice

Almost half of all financial advisers are now providing ESG investment advice, according to a new report.

This is a key finding of new research from Australian Ethical and Investment Trends and shows a significant increase from 2016 when just one in five advisers operated in the space.

"More advisers than ever are taking ownership of responsible investing, with most ESG advisers seeing it as a requirement for delivering good advice," Australian Ethical said.

"68% of advisers agree that it's their responsibility to ensure clients' investments align with their values, and 65% agree that asking about client's ESG needs is required to fulfill their best interest duty."

According to the report, the most popular topics discussed are renewable energy (53%), climate change (51%), fossil fuels (51%) and human rights (33%).

When it comes to responsible portfolio construction, the top five methods advisers use to choose responsible investments include ESG integration, sustainability-themed investing, active ownership, negative screening, and positive screening.

The most popular products used include active managed funds (45%), active ETFs (34%), index managed funds (30%), index ETFs (30%), and managed accounts (26%).

Greenwashing was considered to be the biggest challenge by investors when recommending responsible investments.

"With investor demand for responsible investing continuing its rapid rise, advisers are getting on the front foot - embracing responsible investing as an opportunity to enhance their value proposition and build better rapport with clients, whilst being a positive contributor towards both the environment and community," Australian Ethical said.

Read more: Australian Ethical