Speaking at the Lang Cat’s latest HomeGames webinar yesterday (22 June) Kowalski outlined what she saw as the two important changes needed in the advice industry to make ESG the default.
“The two things the industry needs most of all come from two sources. One is the FCA and their green labels - please put them out soon and please let them be sensible so we can all just get on with it and react to it and move on,” she said.
Along with the sustainable investment labels, or green labels as they are also known, Kowalski said clients need to be listened to more.
“All the talk that we do is all so industry focused. We’re all in this financial services bubble. I don’t think many people out there on the street talk about ESG, it’s not the language they use. So let’s try and actually make this relate more to non-financial services people,” she said.
FTAdviser understands that the proposed rules around sustainable investment labels, which are intended to help consumers navigate sustainability characteristics of different investments, will be published in July.
Kowalski was joined on the Lang Cat panel by Holden & Partners’ managing partner Steven Pyne, Lang Cat’s insight director, Steve Nelson and Aviva’s head of retail propositions Al Ward.
Discussing the challenges and solutions to ESG advice, Pyne, whose firm specialises in ethical investments, highlighted that greater regulation or continuity of approach is needed between the ratings agencies.
“You can go to numerous different ratings agencies and you might get a very good rating for a portfolio in terms of what it is investing in or not investing in, but how does that square up against a different ratings agency?” he said.
Pyne also pointed out that the sector still struggles with terminology in this area, saying that consistency is needed.
“Ethical, environmental, sustainable, impact - all these terms get thrown around but there is never a definitive name for what we are doing," he said.
Adding to these difficulties is what Lang Cat’s Steve Nelson characterised as a confidence gap in the profession with advisers.
Referencing research currently being conducted by the Lang Cat, Nelson noted that contradictions in terminology, ratings and screening have contributed to this gap.
Aviva’s Al Ward noted that despite these issues around clarity and consistency, he has seen a rise in people asking questions around ESG.
This was echoed by Kowalski, who said: “There is going to be increased demand for this. I tend to hang out in a world where people are interested in this sort of thing and people are approaching me more and more often, from all walks of life.
"Obviously I don’t give advice, but a large amount of people are increasingly interested in this sort of stuff.
“But they know so little about what the industry can offer them, so they are quite at risk of getting something inappropriate. Everyone wants to know ‘what can I do’ but they don’t know how to practically translate that into their finances.”
