Greenwashing and a mistrust in fund providers is a key area of concern for advisers in relation to sustainable advice, a report from the Personal Finance Society has found.
Despite this, just half of the firms surveyed actively checked for inadvertent greenwashing.
Don MacIntyre, interim CEO of the PFS, said: “With the consumer duty coming into force last year, and with Sustainable Disclosure Requirements and investment labels being rolled out during 2024, there is a need for an investment in awareness and competence across the sector, not just to satisfy regulatory demand, but to respond to growing interest from clients.”
The professional body gathered the views of almost 500 advisers via a survey at the end of 2023, and published its findings today (February 12).
The report, Sustainable Finance: Knowledge Gap, found just four in 10 firms included ESG and sustainable investment knowledge as part of their training and compliance regime.
While just 52 per cent said their firms actively check for inadvertent greenwashing.
MacIntyre added: “This report illustrates that there is a good general awareness of ESG and sustainable financial advice, but that we do not yet have consistent approaches or levels of confidence in advice.
“Indeed, there are a number of inconsistencies in the ways that similar questions have been answered that suggests we should look at the broad picture rather than individual statistics in isolation.
“One clear message we can take from this survey is that we must focus not just on the technical understanding ESG funds and ratings, but on the practical skills of investment selection, client education and communication.”
The PFS made a number of recommendations to firms on the back of the report.
It said firms should consider including a standard level of competence related to ESG in their training.
It also suggested clients should consistently be asked about sustainable investment preferences and educated on the available options.
tara.o'connor@ft.com
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