Presenting at ifa sister brand InvestorDaily’s ESG Summit 2021, CoreData principal Andrew Inwood said the group had conducted a series of recent focus groups with advisers to look at how they were dealing with the growing ESG trend.
“Our research says older advisers tend to reject ESG – they’re not interested, it’s not important,” Mr Inwood said.
“Younger advisers are wedded to price – there are good [ethical investing] businesses out there who they think are expensive, their returns are fantastic but they’ve failed to translate the idea that this is no longer an expensive product.”
While advisers at both ends of the spectrum were often reluctant to recommend ESG products, clients themselves were seeking more information, with 47 per cent of the 1,300 consumers surveyed by CoreData saying a lack of understanding was their primary barrier to investing ethically.
“Consumers are tending to drive demand, but the problem is consumers and advisers can’t tell the difference between the products – they’re ubiquitous and opaque,” Mr Inwood said.
“There’s a limited understanding of ESG, people don’t understand what it is and what the differences between the objectives are. That’s an education push that we can get right in the next 12-24 months.”
With over US$103 trillion of global assets now being invested in ethical products, Mr Inwood said it was important for advisers to understand more about the market and which consumer groups were driving demand in Australia.
He referenced the group’s recent piece of research around super fund members and ESG, where tertiary education industry fund Unisuper had recorded the most amount of members – 21 per cent – saying they were willing to sacrifice returns for social responsibility, with retail funds Suncorp and ING Direct as well as Australian Catholic Super also scoring highly.
“The percentage of members willing to sacrifice returns for responsible investment … was highly correlated toward education, and a bit around faith as well,” Mr Inwood said.
“If you start to segment your database and understand who you’re selling to, you can start to meet those needs fundamentally and well.”
ESG is flavor of the month in the community. ESG investing is an easy sell.
AMP is your typical “ethical” company.
Personally, I don’t go out of my way to recommend ESG products as I think alot of the screening used is BS. Most ESG funds are pretty basic with firearms, tobacco, coal mining being excluded. How ethical are companies like the major Aust banks, Unilever, Facebook, Amazon, Woolworths, etc.
IMO most ESG funds are a nice way for fund managers to do things slightly different and charge higher fees.
Make sure you dive deep when looking at how ethical each fund actually is.