ESG Investing  

Half of advisers untrained in ESG despite looming rule change

Half of advisers untrained in ESG despite looming rule change

Nearly half of advisers have received no training on environmental, social and governance rules, research has shown, as regulatory changes loom just around the corner.

Research from Aviva Investors showed 45 per cent of advisers felt out of the loop on ESG issues and admitted to having “no ESG training at all”.

The financial giant polled 190 advisers in September and found despite the fact the vast majority of advisers (92 per cent) believed ESG investing would constitute a larger part of their business in two years’ time, this was not translating to their current day-to-day practice.

Just over a third (35 per cent) said they took ESG into consideration every time they discussed investment options with their clients. When asked about the main reason for doing so, just 5 per cent said it was because they were confident to do so.

The findings come as Mifid II will bring financial advice firms in line with the EU’s sustainable finance action plan through the integration of sustainability and ESG considerations from 2021.

As a result, it will become mandatory for firms to include questions on ESG investing as part of their suitability process with clients.

The rules are expected to accelerate an already growing trend in ESG investing, with investors increasingly opting for funds with an ethical tilt.

Unless there are heavy withdrawals from the sector in the next few months, ethical funds are on course to have a record-breaking year in terms of inflows.

Figures from the Investment Association out yesterday (October 20) showed investors have pumped nearly £4bn into ethical funds in 2020 so far, significantly more than the £3.2bn recorded for the whole of 2019.

Thomas Tayler, senior manager at Aviva Investors’s Sustainable Finance Centre for Excellence, said: “With an unprecedented amount of ESG regulatory transformation in progress, many financial advisers are about to face a huge change in the way they conduct business.  

“For the first time, firms must disclose how sustainability risk is integrated into investment decisions for products, show the expected effect of sustainability risk on the product’s financial returns, and be able to prove how adverse impacts are identified and mitigated and advisers will need to help clients navigate all that information.”

Aviva Investors announced today (October 21) the launch of an online, interactive, CPD training programme for financial advisers to help them prepare for the regulatory changes.

The course — named ‘ESG: Know How’ — will offer five training events throughout November, covering the evolution of ESG, the regulation itself, key sustainable threats, the many faces of ESG and the role of ESG in financial planning.

imogen.tew@ft.com

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