The firm has launched a white paper style sustainability guide for financial advisers to use with their clients, ahead of the UN Climate Change Conference (Cop26) next week.
The guide is designed to assist advisers in meeting future regulatory requirements and help clients fully understand sustainability preference and the topic of sustainable investing.
It focuses on what is meant by sustainable investment from the perspective of the environment, broader society and how business activities can align for the common good, as well as key sustainability risks, impact and investment opportunities to bring about change.
Psychological factors that can influence preferences are also covered, alongside an overview of investment solutions that can be aligned to unique sustainability preferences.
Ben Goss, chief executive officer at Dynamic Planner, said: "With estimates of over £5trn 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.”
Change is needed
In a recent survey by the firm, 54 per cent of advisers said they needed to increase their own knowledge around ESG and sustainable investing.
Dynamic Planner said this guide was intended to inform the discussion and conversation between investor and adviser and was being launched at a time when consumer interest in sustainability is expected to peak.
Goss said: “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.
Sustainable investing has moved on considerably, with less of a focus on 'green' investments, and more consideration around the positive impact money can have, including to make changes to existing poor practices.Martin Bamford“This is hugely important as it will help ensure capital is channelled efficiently and productively to support the vital transition to global environmental sustainability.”
Martin Bamford, director of client education at Informed Choice, said his firm is seeing a growing level of interest and demand for sustainable investing.
“Movements like the Extinction Rebellion and the work of Greta Thunberg have highlighted the urgency of making immediate changes, many of which can be driven by better investment choices,” he said.
“Sustainable investing has moved on considerably too, with less of a focus on 'green' investments, and more consideration around the positive impact money can have, including to make changes to existing poor practices.
“A sustainable portfolio is one which is well-positioned for inevitable changes in the future, rather than a set of investments anyone would consider 'perfect' today.”
Bamford said Cop26 will add “further urgency” to the required changes and generate further client interest in ESG.
Meanwhile, Tim Morris, IFA at Russell & Co Financial Advisers, said he believes more information about how companies are helping improve the environment is needed.
“Perhaps a carbon rating to show how they have reduced their carbon footprint over the last year,” he said. “And how this will help them meet their ‘net zero’ pledge.”
“Investment companies that have a clearly defined investment process help alleviate investors' concerns about greenwashing. Investors are likely to feel more confident they are making a difference and are investing according to their beliefs.”
Morris said one way to do this would be how some firms currently link their investment strategy to the UN Sustainable Development Goals (SDGs) and explain how each investment meets their criteria. If there are concerns, they will explain how they are engaging the company directors to encourage improvements towards these goals.
“Being able to clearly define and document discussions will also reduce risk for advisers and help them demonstrate the discussion and suitability of ESG investments,” Bamford said.
A 'key moment'
Ahead of the Cop26 conference in Glasgow, chancellor Rishi Sunak published a roadmap for the UK’s Sustainability Disclosure Requirements to help investors understand whether the firms’ practices align with their own sustainability preferences.
Dr Ben Caldecott, founding director of the Oxford Sustainable Finance Group at the University of Oxford, said the conference was 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,” he said. “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.”
sonia.rach@ft.com
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