Greenwashing and understanding regulation are big concerns for financial advisers in regard to ESG investments, research from CoreData has found.
The firm surveyed 266 UK advisers and found nearly half (46%) were worried about greenwashing. But 35% admitted they are confused by the growing array of ESG regulations intended to combat greenwashing.
Adviser confusion over ESG regulations in part reflects low levels of knowledge. Some 29% of advisers agreed their knowledge of the Sustainability Disclosure Requirements (SDR) is poor.
Furthermore, just 17% of advisers overall disagreed they have poor knowledge of SDR – indicating less than one in five have a solid understanding of the incoming regulation.
The CoreData study also highlights an ESG knowledge gap, underlining the importance of advisers receiving the necessary training and education to improve their understanding.
This is something advisers themselves acknowledge — some 39% agreed they need more ESG training.
But while advisers recognise the need to enhance their ESG knowledge base, they are struggling to get the necessary support. Only a third (34%) said their firm provides ESG training.
Furthermore, just 20% of advisers said their firm has, or plans to have, at least one member of staff in a dedicated ESG role.
Andrew Inwood, founder and principal of CoreData, said: “Financial advisers are battling against a hazardous set of headwinds including inflation, interest rate rises and a cost-of-living crisis which has sent UK investors running for cover.”
“But as advisers swim against these currents, they also need to contend with a wave of ESG regulations. So, it is little wonder that some are feeling confused and calling for additional training. This situation provides an opportunity for asset managers and providers to bridge the ESG knowledge gap through the provision of educational and training materials for advisers.”