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ESG white paper lays out investment facts for advice firms

8 September 2020

A new white paper focusing on environmental, social and governance investment has been published specifically for advisers and financial planners as they advise a growing number of clients on this sector.

The paper from PortfolioMetrix, entitled ‘ESG in Investing: everything you wanted to know but were afraid to ask’ seeks to lay out all the facts so advisers can guide their clients to portfolios that match their appetite for responsible investing.

It comes ahead of new MiFID II ‘sustainability risk’ measures, set to come into force in 2021, which will require advisers to ask clients about their ESG preferences.

Nic Spicer, UK head of investments, PortfolioMetrix, said: “There is so much noise about ESG at the moment that it’s difficult for advisers and their clients to get a clear idea of how all the pieces of responsible investing fit together. In our view it is crucial advisers have all the facts, chiefly so they can guide their clients to portfolios that match their appetites for responsible investing.

“It is also very important because regulation is coming imminently that will mean advisers are at risk if they are not properly prepared and equipped to advise on this area.”

The paper includes a breakdown of the different terminology linked to ESG and how it fits together and relates to both advisers and clients; the history and size of the market; the characteristics of responsible investment; as well as how responsible investment portfolios have performed and what this could mean for the future.

The paper also looks at forthcoming regulation, providing an overview of what advisers will have to comply with going forward.

Spicer added: “Every adviser will need to have meaningful conversations with clients on ESG. How much impact do clients want to have with their investments, and how might those choices affect the long-term performance? What is greenwashing and how to recognise it? These are all elements we cover in our paper and I hope it helps provide clarity for any adviser looking to extend their knowledge in the ESG area.”

The white paper is available as a free download from the PortfolioMetrix website.

Professional Paraplanner