He explains that this is slowly changing as public awareness rises as well as campaigning activity, but there is a long way to go.
“More funds now use ESG data as part of their stock selection process, but this is quite different from sustainability,” he says. “This is because ESG is not a qualitative metric and will often focus on the sheer volume of data and analysis available on a stock.
“ESG is a poor fit with retail investing concerns as for private investors it’s the qualitative factors that are vitally important.
“Our expectation is that the Financial Conduct Authority’s work around fund labels will drive greater clarity and transparency in this fragmented and confusing marketplace.”
Meanwhile, Patel agrees that the shift towards sustainable investing will be the outcome in time, but he argues it is the transition that is “questionable and disappointing”.
He says: “Fund management groups who yield enormous financial clout as shareholders and bondholders argue that positive engagement is the best course of action rather than disinvestment from companies who contribute to environmental damage, poor labour relations and governance that places profit before people.
“The pace of moving to a sustainable investing universe appears slower than that required to reduce global warming.”
Sonia Rach is a senior reporter at FTAdviser