Short-termism encouraged by various retail ratings' houses works against long-term sustainable investing unless a strong values perspective is presented, AMP Capital head of sustainable funds said.
Dr Ian Woods said it has become a "harder task" to get retail investors to invest if the traditional definition of sustainable was used.
Fund managers and advisers must think of companies' intangible assets as part of their sustainability, Woods said.
"Some advisers are uncomfortable with talk about 'values'. They're more comfortable talking about 'tax-effective'. How do advisers start the conversation about values - that's the challenge," he said.
"Sustainability is a much more complex matter than just trees."
However, the concept of sustainability was "very challenging" to communicate, with many fund managers and advisers seeing it in the narrow sense of planting renewable trees or similar concepts, he said.
"But, sustainability is a much broader practice," Woods said.
As senior research analyst, Woods is responsible for all environment, social and governance matters in AMP Capital Investor's $30 billion in funds under management.
Other practices which comprised a company's sustainable practices included employee management, structures of executive remuneration, supply chains, customer relations - complaints and satisfaction, safety records, cartel behaviours.
"All these affect a company's capability to be sustainable internally, and to meet the forces operating in the outside world - which is external sustainability," he added.
