The Vontobel Advisor ESG Study 2024 shows that 62% of financial advisors are now integrating ESG into their client offerings, up from 53% in 2021.

The study includes the views of 300 financial advisors and wealth managers in 15 countries throughout Europe, the Americas and Asia Pacific.

The study also shows that factors impacting advisors’ confidence in ESG are inconsistent standards, metrics and taxonomies (88%), not enough suitable sustainable products available (82%), and the evolving ESG regulations (81%).

However, when asked what percentage of their total book of business is invested in ESG, 54% of advisors globally said less than 10% is currently invested this way. European advisors were the most likely to have a greater book of business in the space, with 24% investing at least a quarter of their total book in ESG, compared with 16% in APAC and 11% in the Americas.

For those advisors who have limited, or no, allocations to ESG, the overwhelming reason provided (80%) was that ESG is simply a trend.

Most advisors now believe that ESG investing has a neutral to positive impact on investment performance, with 65% believing it doesn’t harm performance at all. This is most prevalent in Europe, with 76% of advisors believing it has a neutral to positive impact.

Christoph von Reiche, Vontobel’s Head of Institutional Clients, said, “Although ESG has been facing several headwinds recently, our study shows that it is set to continue to rise in popularity among investors in the coming years to the extent that Bloomberg Intelligence estimates that global ESG assets will rise to USD 40 trillion by 2030. With their knowledge, competence and closeness to clients, financial advisers and wealth managers play a key role in helping the ESG sector to grow further and enabling investors to benefit from this important trend.

However, there still are significant hurdles and the whole investment industry needs to provide greater support in helping advisors overcome these obstacles. On the perceived lack of suitable ESG products across asset classes, a closer and more open dialogue between both parties could help ensure that advisors’ needs, and those of their clients, are met appropriately.”

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