“My clients aren’t interested in sustainable investing.”
“There just aren’t proven sustainable investing products out there.”
“Recommending sustainable investing products isn’t consistent with fiduciary duty.”
Do these statements sound familiar? If they are the kinds of thing you tell yourself or your clients, you risk being seen as out of touch. Furthermore, you take the chance of alienating current and future clients who very much want to align their investments with critical environmental and social issues.
Did you know that more than $12 trillion in assets under management are engaged in one or more strategies of sustainable investment in the United States? This comprises more than 25 percent of the professional managed assets across the country and is a 38 percent growth from 2016 figures. Today’s sustainable investing is about much more than excluding tobacco stocks, oil companies or gun manufacturers. It’s also about reducing risk, finding best–in-class companies with strong environmental, social and governance (ESG) practices and delivering competitive investment results.
Studies have shown a disconnect between investor interest in sustainable investing and advisor expertise. For example, a survey from Calvert Research and Management found that 73 percent of advisors noted their clients are asking for sustainable investments, but only 17 percent said it’s a strategy integral to their practice.
This likely results from common misperceptions surrounding sustainable investing which we often see when US SIF conducts trainings with advisors across the country. We distill those issues below.
“My clients aren’t interested in sustainable investing”
As the Calvert survey shows, clients and potential clients are interested in sustainable investing. Nuveen’s fourth annual responsible investing survey also reveals strong—and growing—interest. Eighty one percent of investors surveyed stated they wanted to advance environmental sustainability, up from 73 percent in 2015. The number who said their investments should strive to make a positive impact on society rose from 75 percent in 2015 to 80 percent. Interest in sustainable investing was most pronounced among millennial investors, with 93 percent reporting strong interest in sustainable investing.