Despite a challenging two-year period for ESG investments, more financial advisors are integrating them into their practices with clients, according to a study.
The Vontobel Advisor ESG Study 2024 study surveyed 300 financial advisors and wealth managers across 15 countries in Europe, the Americas and Asia Pacific, revealing that 62% are now integrating ESG, up from 53% in 2021.
About 54% of advisors reported that less than 10% of their business is invested in ESG. However, expectations are high, with 63% predicting that at least 10% will be invested in ESG over the next three years.
According to the findings, European advisors are leading this trend, with 24% investing at least a quarter of their total book in ESG, compared to 16% in the Apac and 11% in the Americas.
About 88% of advisors cited inconsistent standards, metrics and taxonomies as the biggest obstacle. Other reasons cited were the insufficient availability of sustainable products across all asset classes (82%), evolving ESG regulations (81%) and a lack of ESG data, research and information (80%).
Millennials and generation Z demand ESG criteria in investment portfolios
According to the study, concerns over the financial impact of ESG investments have diminished. About 65% of advisors believe ESG has a neutral to positive impact on investment performance, with European advisors being the most optimistic. Despite some viewing ESG as a mere trend, the study highlights a broadening acceptance of its benefits.
Christoph von Reiche, Vontobel’s head of institutional clients, remarked: “Although ESG has been facing several headwinds recently, our study shows that it is set to continue to rise in popularity among investors in the coming years to the extent that Bloomberg Intelligence estimates that global ESG assets will rise to $40 trillion by 2030. On the perceived lack of suitable ESG products across asset classes, a closer and more open dialogue between both parties could help ensure that advisors’ needs, and those of their clients, are met appropriately.”
