What does the evolving sustainable investing landscape mean for advisers?

Six months on, Tenet and other financial services industry stakeholders sat down to reflect on how the investment sector has responded. Organised by Reset Connect and moderated by Julia Dreblow of SRI Services, the panel took a deep dive into the key issues facing advisers, from repurposing funds and client demand to stewardship and beyond. The panel included:

• Mike Dowsett, Senior Research Consultant, Tenet Group
• Seb Beloe, Partner, WHEB
• Wayne Bishop, CEO, King & Shaxson
• Ben Constable Maxwell, Head of Sustainable and Impact Investing, M&G Investments

A changing landscape for advisers

Kicking things off, the panel considered how COP26 has changed the landscape for financial intermediaries. Mike Dowsett of Tenet highlighted that COP26 has focused minds but demand from end clients for ESG solutions had already been growing for the past couple of years, making it hard to measure its immediate impact. A key takeaway from the climate conference though was the importance of capital being allocated to the right places, which he believes will drive sustainable investment returns over the long term.

He also pointed to the regulator’s corresponding paper on sustainable disclosure requirements, and how advisers should pay close attention to proposals around investment labels, which could aid advisers with their research and comparing products.

Repurposing funds – fact or fiction?

As the conversation turned towards repurposing investment funds, Mike argued that the key question for advisers is making sure they understand what’s changed if a sustainable label is added to an already existing fund name. Such greenwashing can be difficult to spot and is rightly creating nervousness among financial advisers.

The panel then considered whether advisers can truly talk about stewardship in confidence. Mike pointed out that when it comes to making shareholders’ voices heard, advisers are a step removed from the corporate engagement activity undertaken by fund managers. He explained that advisers need to do their own homework on fund managers’ engagement levels to ensure alignment with client concerns.

Has COP26 been overtaken?

Turning to more recent events, the panel reflected on whether the impact of COP26 has been overshadowed by Ukraine and the energy crisis. Mike emphasised that sustainable investment is for the long-term and that advisers can expect such long-term demand to continue regardless of the current environment.

He also recognised the potential for current circumstances to dampen demand for all types of investment, and while there has been an impact on ESG investments’ short-term performance, the long-term potential remains.

Mike wrapped up the session by pointing out that the current crisis has put reliance on fossil fuels in the spotlight. He concluded that such dependence must change to ensure the Paris Agreement climate goals are met and to prevent reoccurrences of the current energy crisis. Mike added that sustainable investment through the appropriate directing of finance towards greener energy solutions, as well as corporate engagement with industries reliant on fossil fuels, can serve as positive drivers to this aim.

The full session is available for play back on demand here.

Tenet is a founding partner of Reset Connect London 2022, the UK’s largest sustainability ecosystem and green investment gathering, taking place at ExCeL, London, from 28-29 June 2022. Don’t miss Tenet CEO Mark Scanlon at the Tuesday panel session ‘Delivering on COP promises. Switching to Paris aligned funds & standards’.

For more information and to register, please visit:https://www.reset-connect.com/home