Advice Investments Wealth management
Search

The rising appeal of sustainable investing

With Gabriela Strug

10/12/2019

Gabriela Strug

Financial planner at Quilter Private Client Advisers

For as long as I can remember the environment and human’s impact on the world has been regularly featured in the news. However, this won’t have been the case for many of my clients who will have grown up during a time when the environment was far lower down on the media’s agenda.

In recent times the press interest has ramped up to unprecedented levels but despite this the perceived immediacy of these problems varies drastically from generation to generation. Last year we did some research at Quilter and one question explored whether the respondents would be interested, if at all, in investment products that aimed to deliver financial returns alongside a positive environmental and/ or social impact. The results showed 72% of 18-24 year olds were likely to be interested in some form of positive investment but this drops to just 55% for people who are 55 plus.

However, in my experience even the older generations are now are starting to want to invest sustainably particularly if you actually broach the subject with them. In fact many of my clients have travelled extensively and seen first-hand how the world is changing as a result of human activity such as a client who after seeing the destruction of the rainforest for palm oil production was insistent they explore sustainable investing.

I routinely discuss clients’ investment preferences around sustainability so I’m pleased that the European Commission revealed that it is looking to make this a mandatory part of the financial advice process in future.

Simply, having the conversation can be an excellent way of getting to know where a client stands on a whole host of issues and can be a brilliant way for creating a good rapport. However, having this conversation could have far further reaching consequences too.

If we look to plastic bags, all it took was charging 5p for them for their use to drop by over 90%. This shows that a small push in the right direction can have a huge impact on people’s behaviour. If all financial advisers include an ESG section in their assessments it could end up having a significant effect on the amount of money invested in more sustainable funds.

However, naturally the client is always king and as financial advisers, whatever our views, it’s our job to help them achieve their financial goals whether green or not.

Getting financial advisers to broach the subject of sustainable investment with their clients will not be the silver bullet which helps quell climate change or cleans up the planet, but even very small efforts can collectively have a large impact. In any case the client of the future, according to our research, is going to predominantly want to invest in this fashion regardless.