More than 80 per cent of consumers now expect their retirement savings to be invested ethically, and adviser platforms are moving quickly to cater to the mainstream adoption of ethical investing, a fund manager has said.
Addressing the recent AIOFP conference in Hobart, Australian Ethical head of client relationships Leah Willis said recent research indicated that ethical investing was now an essential requirement for most Australian consumers.
“If you thought this was a deep green option just for those niche clients that walk in the door and have specific concerns, that’s no longer the case,” Ms Willis said.
“It’s rapidly entering the mainstream. More than two in three Australians don’t want their money to harm the planet, and we saw investors really drive home this message to the federal government in particular last year when we went through the bushfires.”
The fund manager’s data revealed that 86 per cent of consumers now expected their super to be invested responsibly, and that 9 out of 10 Australians expected their adviser to provide an ethical investing option.
“I would say this momentum is growing even more recently - we’ve been meeting with all the platforms in the market, and Macquarie is now replacing every single investment option with an ESG or deeper option,” Ms Willis said.
“CFS is also about to go through a full review of their platform, and if they replace an option today it will have an ESG overlay if not go deeper. So this is rapidly moving into our portfolio construction.”
However Ms Willis said that many ESG exclusions or indices did not currently match up with consumer needs, with fossil fuels in particular generating more than 30% of searches on the RIAA website, while fossil fuel companies still made up almost 20 per cent of portfolio holdings among managers with an ESG screen in place.
“This creates an opportunity for you as advisers to make sure you understand what your client’s concerns are, and are the options you’re giving the lining up with what they have,” she said.
“That’s beyond risk and return and what they want out of a lifestyle - it’s about how do they want to live in retirement, what are their views on climate and the positive society they want to live in in retirement, not just to be financially secure.”
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