Transparency key to ESG advice success

Advisers are finding it difficult to provide advice on ethical, environmental, social and governance (ESG) considerations due to limited transparency from the $2.7 trillion super industry.

Australian Ethical head of client relationships Leah Willis said nine in 10 Australians expect their superannuation or other investments to be invested responsibly and ethically but advisers and consumers struggle to obtain a complete picture of many funds' holdings.

"Our experience suggests that Australians want more alignment between their investments and their values but a lack of transparency makes it difficult for advisers to point them in the right direction," she said.

"The current lack of disclosure by super funds is preventing Australians from knowing exactly where they are invested and what activities they are funding through their superannuation and other investments."

In response, Australian Ethical has announced the launch of a public awareness campaign with the expressed aim of highlighting these issues.

It believes that by increasing awareness more Australians will consider the social and environmental impact of their investments alongside economic performance.

Willis said: "Ethical and responsible investing presents advisers with a great opportunity to form deeper, more meaningful relationships with their clients by matching them with investments that align with their personal values."

"And while a growing number of Australians are actively seeking Australian Ethical out as having the highest ethical conviction of any responsible fund, challenges in the sector include limited knowledge, confusion, and a lack of advice.

"The many "shades of green" can be bewildering for investors, and it is the adviser's role to demystify and simplify the ethical investing journey so their clients can make informed and empowered decisions."

According to the Responsible Investment Association of Australia (RIAA), ethical investing quadrupled in Australia between 2014 and 2017.

The KPMG Super Insights Report for last year found that Australian Ethical was the fastest growing super fund in Australia by membership for the past five years.

Australian Ethical emphasises the interest in ethical investing is mainstream, which the data appears to support, rather than just a concern for young people or activists with strong views on certain issues.

Willis said this shows: "For advisers to attract and retain clients and appeal to future investors it is critical they realise ethical investing is not a fad. It is here to stay."

Read more: AdvisersAustralian EthicalAustraliansESGInvestment Association of AustraliaLeah WillisKPMG Super Insights Report for
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