And the growing popularity of CSR and ESG-oriented investment funds is measurable. She points to the 2016 Eurosif SRI study, which shows annual inflows into this type of sustainable investing are growing at an annualised rate of 120 per cent.
Indeed, the latest Global Sustainable Investment Review (GSIR) report shows the billions of dollars' worth of money going into SRI assets. The figures, below, show the levels to the end of 2016.
Source: GSIR 2017 report
According to Ms Crowl, this is set to continue: "Recent Sustainable Finance initiatives by the European Commission will encourage more retail flow of funds to activities and companies that are taking positive steps towards the environment and social concerns.
"Rates of return may differ between these philanthropic investment projects and liquid open funds, but what is clear is that the investor and the fund manager must have a long-term view on sustainability issues."
Conclusion
However, there still seems to be a reluctance among UK financial advisers to recommend funds that are explicit about their CSR or ESG critera.
This is presumably based on historical and erroneous beliefs that SRI and ESG-oriented funds exclude certain strong-performing stocks, and therefore are poorer overall performers.
Yet as the FE data shown in the third article in this guide indicates, funds with a strong SRI, ESG and CSR orientation tend to be far better performers long-term than their peers.
So why are many advisers - especially those considering themselves to be whole of market - not actively discussing these with clients as part of the portfolio suitability process?
This is not based on anecdotal evidence - although there is plenty available online - but has recently been highlighted in a government report which came out on 12 June.
The 51-page: Growing a Culture of Social Impact Investing in the UK report revealed a huge reluctance among advisers to make clients aware of impact or general 'ethical' funds, and a consequent lack of awareness among consumers.
The report found there were reasons for this, including:
- A lack of product supply.
- The belief that financial returns must be sacrificed.
- A low level of awareness and understanding among investors.
- A lack of training and sector knowledge among advisers and trustees.
The report said: "Perhaps surprisingly, research shows that having a financial adviser makes people less likely to have prior knowledge or engagement with social impact investment.
"In the words of one adviser, 'I still don’t fully understand social impact and do not see it anywhere'. Still, some 58 per cent of advisers believe that training and continuing professional development would help them offer the investment to their clients."
But engaging with the different flavours of ESG, SRI and CSR can make a big difference overall to a client; it just depends on which one is right for the individual investor.
