Just 1% of financial advisers and wealth managers “completely trust” sustainability claims from funds, according to research from the Association of Investment Companies (AIC).
The AIV said 200 financial advisers and wealth managers were asked to rate their trust in funds’ sustainability claims on a scale of 1 (do not trust at all) to 5 (completely trust).
Only 1% of respondents responded with a ‘5’ score, while the majority (56%) responded with ‘3’, indicating “limited trust.”
The research among 109 financial advisers and 91 wealth managers was conducted for the AIC by Research in Finance.
The research showed that fears of greenwashing could be allayed by more specific information, including examples.
One wealth manager said: “I would need to see real examples in the portfolio. I would need them to say, ‘We looked at company X last year. We really, really liked it. It scored really well on all our stuff but then when we thought about it from a sustainable point of view, we didn’t invest in it’.”
Despite the scepticism about ESG claims, financial advisers and wealth managers remain supportive of ESG investing.
About 79% agreed that “investments should make a positive difference as well as a financial return.”
Nearly half of respondents (48%) consider their firm to have been an “early adopter” of ESG investing, a further 31% said their firm had recently bought into the value of ESG, while only 1% said ESG was “not something my firm is interested in.”
Nick Britton, Head of Intermediary Communications at the AIC, said: “Advisers and wealth managers are overwhelmingly on board with ESG and sustainable investing, but they’re also keenly aware of the risks of greenwashing with only 1 in 100 completely trusting ESG claims from funds.
“In the light of this, the FCA’s decision to impose stringent rules on how funds present their sustainability claims looks timely, and it’s one we fully support.
“ESG investing has faced a perfect storm this year, and this has clearly affected expectations about performance and risk.
“Market falls, higher inflation and the war in Ukraine have made many advisers and wealth managers more wary of investing in sustainable funds in the short term, though they still expect demand for ESG investing in general to increase over the next 12 months.”