The majority of advisers consider ESG considerations to be very important when building portfolios for their clients, a new study by Foresight has shown.
The research found that 80% of advisers consider it important, including 28% who say it is ‘very important’, up from 65% who described it as important a year ago.
UK retail investors are also following the same trend, with 12% of advisers saying that over half of their clients now express a preference for ESG investing, compared to 9% in 2020. Almost half (45%) of respondents believe that education sessions would encourage them to suggest ESG funds more frequently to clients.
Foresight Group said one asset class with significant sustainability implications is real estate, with 33% of advisers seeing an increase in appetite for “sustainable” real estate. The most popular reason for this interest is the wish to support companies that are speeding up the adoption of sustainable practices, which was cited by more than three quarters (78%) of advisers.
A third also cited sustainable real estate’s potential to deliver returns that are not linked to global equity markets and 19% believe it is due to the resilient, consistent yields within real estate.
However, the research also showed that advisers consider the greatest challenge facing ESG investing to be the lack of industry-wide definition.
Mark Brennan, partner at Foresight Capital Management, said: “We are enthused to see that IFAs are increasingly open to joining the global movement towards sustainable investing.
“Major steps forward have been taken this year in helping companies and investors define what qualifies as a sustainable economic activity or investment, although the investment industry is still some way from providing standard definitions.
“At Foresight 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.”
