ANNOUNCEMENT: UK Adviser is now PA Adviser. Read more.

Advisers want more support in accessing ESG investment data

Market ‘increasingly challenging for firms to navigate’

|

Over a third (36%) of wealth management and advice firms say they want more support in accessing the right sustainable finance and ESG investment data, research has found.

A survey from the Personal Investment Management & Financial Advice Association (Pimfa) and Alpha FMC, a specialist management consultancy for the wealth and asset management industries, found the ESG data market is “becoming increasingly challenging for firms to navigate”.

Only 7% of firms feel they are doing an excellent job of educating their clients on sustainable finance and ESG investing.

The research also said firms are unclear about the different rating systems and methodologies they should use.

Pimfa members also reported that data vendors are providing a range of products and services, each with their own methodologies and standards, but that they rarely offer ‘a one-size fits all’ set of standards to cover the full array of asset classes and investment products.

The survey found that this is leaving firms in a difficult position as to how best to use different data or reporting processes. In addition, members reported that a lack of consistency in ESG terminology is making it harder for firms to support their clients in understanding this topic.

Over two-thirds (69%) of respondents said they are taking into account their clients’ ESG investing preferences when assessing suitability. ESG investment strategies that are proving the most popular are negative screening (71%) and thematic investing (69%). Nearly half (48%) also referred to impact investing.

Maja Erceg, senior policy adviser at Pimfa, said: “The proliferation of ESG definitions and interchangeable language used throughout financial services has caused confusion for clients, and wealth managers and advisers feel they are being left to tell clients what ESG means.

“Clearly there is a need for standardisation both in terms of how data is used and the methodology for collecting that data and the terminology to describe ESG.”

Latest Stories