IFAs want more clarity on environmental, social and governance investment products to be able to better communicate them to clients.
A HSBC Global Asset Management survey of over 200 UK IFAs found that 57 per cent would like more ratings for ESG products.
Concerns over diversity, human rights, consumer protection, and animal welfare are the main reasons for client demanding investments explicitly incorporating ESG issues, according to 33 per cent of IFAs.
However, ESG implementation varies greatly and it can be difficult for IFAs and their clients to navigate the space. Only 13 per cent of surveyed IFAs think that the current ratings available for ESG products are sufficient.
With many clients wanting to invest in line with their personal values, the ability of IFAs to demonstrate which products do so most rigorously is crucial.
But limited understanding of ESG issues and the potential long-term impact on investment portfolios shapes client demand for ESG products, according to 34 per cent of IFAs.
HSBC Global Asset Management head of UK wholesale Daniel Rudd says: “We’ve found a considerable lack of information to adequately explain ESG issues and their impact on companies and in turn, investments.
“Given the complex and diverse ways of implementing ESG, it can be difficult for financial advisers to effectively inform their clients without detailed information and robust ratings.”