Financial advisers are central to driving the interest in socially responsible investment by educating clients that it should be a key driver for investment choices.
Premium Wealth Management chief executive Paul Harding-Davis said there is a common misconception that there is no demand for responsible investments, but in reality, investors are rarely made aware of their opportunities in the sector.
“I often hear in the adviser community there is no demand for environmental, social and governance (ESG) investments, but this is a matter of advisers thinking about product rather than about solutions,” Mr Harding-Davis said.
The Emerald Club managing director Justin Medcalf said that in most instances, advisers are not actually comfortable talking about climate change.
“It is frightening for many and there remains a very high level of scepticism,” Mr Medcalf said.
“However there is a rumbling under the surface and I believe there will be a serious mind shift. It is good to see this pressure building,” he said.
Asset Owners Disclosure Project and Shartru Capital chairman, John Hewson, said that the investment industry would benefit if advisers and investment managers educate their clients that they don’t need to sacrifice performance to invest in the area.
“If investors are educated that they can invest responsibly and not sacrifice performance, then I believe there would be far more demand for these types of investments,” Dr Hewson said.
The increase in client demand has already led to the introduction of ESG framework to be unveiled across the market.
Earlier in November, Hermes Fund Managers were the latest firm to launch a new ESG strategy. The fund was designed with Local Government Super (LGS) and has active exposure to global equities while incorporating ESG principles, and was a response to a growing trend towards ESG integration.
In October AXA Investment Managers also released a new framework to give Australian institutional investors a wider opportunity to invest, incorporating ESG principles.
