Are you hiding behind excuses on ESG advice?

The zeitgeist around ESG has changed over the past year or so.

For firms that specialise in ESG advice or sustainable investing, nothing has changed – it’s business as usual.

But looking across the advice sector, there will be advisers who have gone from seeing ESG funds regularly appearing at the top of the tree when it comes to performance, to ESG funds being not just at the bottom of the tree but buried underneath it.

That’s a reflection of what has happened pre and post Russia’s invasion of Ukraine.

My position is you shouldn’t be getting clients into ESG based on performance.

To my knowledge there has only been one major case involving ESG advice that has gone to the Financial Ombudsman Service (FOS). You might expect complaints to arise around a client wanting ESG investments and then not being offered them, but in this case the reverse was true.

A client was encouraged to go into an ESG fund while it was booming, but later said they didn’t get a proper explanation about what they were invested in. The fund’s performance plummeted, the client wanted compensation and the FOS agreed that the ESG advice had not been given properly.

The feeling I get is that some advisers are avoiding talking about ESG because it’s going through a blip at the moment. But to me, that’s a convenient excuse rather than the reality.

…this is an excerpt from an article ESG Accord’s Lee Coates wrote for Analyser subscribers. If you’d like to read on, sign up for a free trial.

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