PIMFA has highlighted a new report from the Advisers’ Sustainability Group (ASG), Sustainability in Practice: Guidance for Advisers and Trainers, which aims to help firms incorporate sustainability considerations into existing advice and compliance processes.
The report comes as the Government continues its push to position the UK as a leading centre for sustainable finance, supported by initiatives including the Sustainability Disclosure Requirements (SDR) and the investment labelling regime.
Drawing on consumer research, including the FCA’s Financial Lives Survey 2024, the report highlights ongoing client interest in responsible investing.
According to the survey, 76% of adults with investments or defined contribution pension scheme membership believe it is important to be asked whether they want to invest responsibly, while 72% said they wanted their investments to “do some good as well as provide a financial return”.
The ASG says its recommendations are intended to fit within firms’ existing advice processes and compliance frameworks.
The first area focuses on client engagement. The report encourages firms to explore clients’ sustainability, ethical, environmental and social preferences as part of the advice process. It also highlights the importance of recognising long-term sustainability-related risks when considering investment recommendations.
The second area relates to the use of SDR, including the anti-greenwashing rule and investment labels and disclosures. The report suggests advisers can use these frameworks to help identify, understand and explain sustainable investment products to clients.
The third area focuses on training and professional development. The guidance calls for sustainability-related learning to be embedded across advice businesses, covering paraplanners, advisers, compliance teams, senior leaders and service providers.
Alongside the recommendations, the report includes a practical framework that maps sustainability considerations to different stages of the client journey. It also provides guidance for training providers on developing continuing professional development programmes covering sustainability concepts, regulation and client communication.
The ASG said the aim is to help firms build confidence and competence in discussing sustainability issues with clients while working within existing regulatory and advice frameworks.
The report is accompanied by an open letter from ASG chair Daniel Godfrey to the Financial Conduct Authority.
The group noted that the publication reflects the views of the industry-led ASG and does not constitute FCA guidance or represent the regulator’s expectations.
However, it is intended to provide a practical resource for firms looking to develop their approach to sustainability as client demand, regulation and product disclosure requirements continue to evolve.
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