Investors and Advisors Require Additional ESG Education
The majority of Australians perceive ESG to be important but claim they are not receiving the necessary support for sustainable investing. In line with its Australian market launch, Capital Preferences published its ESG is Personal: 2022 Study of ESG Preferences and Advisory Practices in Australia.
While 59 per cent of respondents place a high value on ESG aspects, only one in ten say they are receiving a high-quality ESG investing experience, according to a survey of more than 300 Australian investors.
The survey found that only 14% of investors are convinced that their current portfolio is aligned with their principles.
It also revealed that only 20% of investors believe their advisers clearly explain ESG ideas, and only 38% believe their adviser is committed to assisting them with sustainable investing.
Bernard Del Rey, co-founder and chief executive officer of Capital Preferences, stated that the study discovered a sizable group of investors who desire to make ESG-focused decisions but may not currently feel they are being catered to.
"For advisers who can deliver confidently on ESG investments and put even a fraction of these assets in motion, this represents a particularly valuable opportunity for them," he said.
According to the survey, advisers who provide investors with positive ESG investing experiences are rewarded with much greater advocacy, loyalty, and wallet share growth.
"Moreover, the Net Promoter Score (NPS) for advisers who provide such ESG experience is 67% versus -1.1 % for those who do not," the report said.
The study revealed that two out of three investors lack knowledge of ESG principles such as negative screening and impact investment.
Similarly, among investors who indicate that ESG is important to them, just 34% can specify how much of their portfolio they would like to allocate to ESG investments.
The research showed that Australian investors and advisors require additional ESG education and assistance.
ESG investing has grown in importance in Australia as awareness of ethical investment grows, and more people look to the corporate sector for actions to address global warming.
As a result of their perceived reliability, battery-related and clean technology investments have also grown in appeal. In this context, the financial services industry has a significant chance to meet investors' needs for sustainable investing.
Del Rey stated that the report incorporates recent significant insights into the Australian political and economic environment.
"Labor's recent success in the Federal Election and the rise of independent and Green candidates came in the wake of strong campaign messaging around combating climate change and embracing sustainability," he said.
"Furthermore, as the dust settles from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the advice industry is turning its attention to innovation in service to the client—in particular, how digital technology enables deeper client understanding and delivery of more suitable, highly personalised advice at scale."
Source: Financial Standard
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