Interest in sustainable investing rises, but challenges persist

There’s a growing level of interest in sustainable investments.

That was the headline finding from a new survey of advisers, which concluded that 85% of advised investors are interested in sustainable investments.

The research from fund provider Invesco found that more than half (52%) of investors who are not currently investing sustainably expect to do so within the next 12 months.

Invesco surveyed the attitudes of independent financial advisers in the UK to understand how their clients feel about sustainable investing. This research confirms that interest in sustainable investing is robust.

All generations of investors expressed a strong interest in sustainability, with 90% of under 45s saying it matters that their money is invested responsibly. Three-quarters of over 60s agreed with this sentiment.

Only 15% of the investors surveyed said they had no interest at all.

There was also a widespread interest in sustainable investing from advisers, with 85% discussing environmental, social and corporate governance (ESG) investing with their clients.

Despite more than three-quarters of advisers recommending sustainable portfolios, there does appear to be a need for more information and knowledge.

Inconsistent information makes it difficult for investors to make informed decisions, with 42% of advisers saying a lack of knowledge was the most significant barrier to allocating to sustainable strategies.

The second biggest barrier to ESG investing was a perception by more than a third of advisers that sustainable investments are riskier or more volatile. An additional 31% believe ESG could hinder investment performance.

When it comes to engagement, 38% of advisers do not have a framework for discussing sustainable investment preferences with their clients, only discussing it if the client raises the subject.

45% of advisers worry about spotting ‘greenwashing’, where a green or sustainable label is inappropriately applied to an investment. More than a quarter of investors shared this concern that some investment products are not as ‘green’ as claimed.

Clive Emery, Fund Manager, Invesco Summit Responsible Range, said:

“The sustainable investing universe has grown at a faster pace than could have ever been imagined and can no longer be considered a passing ‘fad.’ We believe as awareness grows and SI is implemented into core products, the statistics from our survey will shift significantly as the conversation grows.

“The topics and issues covered by ESG are so broad and universal and our findings show that it is important to establish that there is a spectrum of sustainable solutions that exist – not a simple one size fits all approach. It’s crucial that advisers and asset managers can confidently educate their clients and ensure they understand what they are investing in.

 “We know that a concerted and common effort from the investment industry – including managers and advisers – will support investors to make informed decisions and be able access the best sustainable investment options that meet their objectives today and in the future.”