Risk profile software provider Dynamic Planner has unveiled a white paper-style guide for financial advisers on how to talk to their clients about ESG issues.
As the UN Climate Change Conference (COP26) approaches, the Sustainability Discussion Guide aims to help advisers and clients alike navigate the world of ESG investing.
It will help understand investor preferences when it comes to sustainability and what the most suitable options will be.
Some of the topics in the guide include:
- What is meant by sustainability in terms of ESG and how business activities can align for the “common good”;
- Key risks and impact investment opportunities;
- The challenges global financial markets face and what actions are being taken by regulators and governments around the world;
- How psychological factors can influence preferences when it comes to ESG; and,
- An overview of investment solutions that can be matched to sustainability preferences.
Recently, both the Financial Conduct Authority and HM Treasury have been exploring how to introduce sustainability criteria for financial advisers.
Dynamic Planner’s guide follows the steps of Royal London and Square Mile who jointly rolled out a series of videos and guidelines to help advisers navigate the ESG options available to them and their clients.
The advice firm has already launched an ESG tool for advisers and clients earlier this year, with its psychometric sustainable investing questionnaire, aiming to shed a light on how to align investor preferences and expectations with the options available on the market.
Need for increasing knowledge
Ben Caldecott, founding director of the Oxford Sustainable Finance Group at the University of Oxford, said: “COP26 is a key moment where governments, companies, and financial institutions will make bold commitments to tackle climate change. Financial firms representing tens of trillions in pounds of assets will be committing to align with the Paris Agreement and shift their portfolios accordingly. These and related developments will further accelerate existing trends in sustainability.
“The transition underway is also unleashing new technologies and business models, helping to drive innovation and productivity improvements in companies around the world, whether public or private. Finding these companies and helping them grow is essential, and also creates unprecedented investment opportunities for investors, especially those who increasingly want to align their investments with environmental and social sustainability. It is also mission critical for tackling the profound environmental and social challenges facing humanity.”
Ben Goss, chief executive of Dynamic Planner, added: “Consumer preference around how we can live our lives more sustainably is rapidly accelerating. With estimates of over £5trn ($7trn, €6trn) of wealth in the UK being passed down generations by the middle of the century, now more than ever we have the opportunity and responsibility to make investment sustainable.
“Not only does this make sense in continuing to build wealth, but also to deliver positive changes for the benefit of future generations.
“Financial advisers have a critical role to play in helping investors understand these trends and navigate the complexity and ensure that the asset managers they recommend are properly measuring and managing both climate and nature-related risks and impacts. This is hugely important as it will help ensure capital is channelled efficiently and productively to support the vital transition to global environmental sustainability.
“In a recent survey, 54% of advisers told us that they needed to increase their own knowledge around ESG and sustainable investing. Our guide is intended to inform the discussion and conversation between investor and adviser, written and presented in a way that investors can use to explore all of the issues around sustainability further.”
