An independent financial advice firm has launched an impact investing push in a bid to give client's "the choice they deserve".
London-based IFA Wren Sterling announced yesterday (February 19) it has added a range of funds that met its criteria on environmental, social and governance investing (ESG) to its panel and will now offer clients the option to rebalance their portfolio to have a bigger focus on such funds.
The firm will also assess clients’ impact investing appetite as a standard part of its new client assessment and existing client review process from now on, it added.
ESG investing takes into account ESG factors alongside financial markers in the investment decision-making process.
It has become a more commonplace part of the global investment space in recent years and Morningstar data shows net flows into ESG products increased by nearly 2,500 per cent between 2014 and 2019.
The increased popularity of ESG has coincided with a greater awareness of the environmental issues facing the world as well as the role of investments in shaping the future of the planet and society.
Amendments to Mifid II (expected to come into force in Q1 2021) will also increase ESG inflows as the new rules will mandate advisers to be more proactive with customers in relation to ESG considerations by asking them about their preferences.
Paul Chafer, Wren Sterling’s chief commercial officer, said: “As advisers, we want to make sure we’re guiding our clients towards their investment goals and we’re determined to do this in a way that chimes with their personal values.
“Our new impact investing panel gives our clients the choice they deserve. Importantly, the performance of impact investment funds has picked up markedly in the last few years, dispelling myths that more socially-focused investors lose out in pounds and pence.”
Mr Chafer said impact investing was the “logical progression” for a society that cares about its future, adding that research showed the next generation of investors was particularly aware of this.
Martin Bamford, director of client education at Informed Choice, said: “It's inevitable that environmental concerns will drive investment decisions to a greater extent in the future.
“With growing awareness of sustainability issues, and movements like Extinction Rebellion constantly in the headlines, we expect to see more clients request ESG options.”
Mr Bamford said firms could save on research costs and make the investment process more efficient if they created standard solutions for impact investing, but warned ethical investing concerns were often very personal so urged firms to take a little care around applying a 'one size fits all' approach.
Scott Gallacher, chartered financial planner at Rowley and Turton, said Wren Sterling was clearly addressing an increasing investor concern and one that he had seen himself among his own clients.
He added: “Naturally, good advisers will have to have appropriate solutions to advise those concerned clients.