Nine-tenths of financial advisers and wealth managers recommend sustainable funds despite greenwashing concerns

by | Nov 9, 2022

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The overwhelming majority of financial advisers and wealth managers recommend sustainable funds to clients, according to research from the Association of Investment Companies (AIC).

Just over nine-tenths (91%) of respondents to a survey of 109 financial advisers and 91 wealth managers1 said they recommend some sustainable funds to their clients, up from 89% last year2

There has been a jump in the number of firms considering themselves to be early adopters of ESG investing. Nearly half (48%) of respondents said their firms were early adopters of ESG investing and had offered an ESG investment proposition for a number of years – up from 37% last year.

Conversely, the percentage of respondents who said that their firms had recently bought into the value of ESG investing fell from 42% to 31% year-on-year.


Only 1% of respondents said that ESG investing was not of interest to their firm.

The broad take-up of ESG investing by financial advisers and wealth managers comes hand-in-hand with widespread concerns about greenwashing expressed in the same survey, with only 1% of respondents stating that they completely trust funds’ sustainability claims3

Sustainable investment companies


The use of sustainable investment companies (investment trusts) has increased year-on-year, as has their appeal to intermediaries. 

Nearly a quarter (24%) of respondents to this year’s survey reported that they used sustainable investment companies, compared to 19% last year.

This increase was driven by wealth managers, 41% of whom said they use sustainable investment companies, compared to 32% last year. 


The percentage of financial advisers using sustainable investment companies has stayed at 10%.

Investment companies invest in a variety of sustainable, environmental impact and social impact assets, many of them unquoted. 

The ESG appeal of investment companies investing in these assets has increased year-on-year, as the chart below shows4

Chart, bar chart

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Source: AIC/Research in Finance. See note 4. 

Nick Britton, Head of Intermediary Communications at the Association of Investment Companies (AIC), said: “Investment companies offer access to a galaxy of sustainable and impact investments that are difficult for other types of funds to invest in – from renewable energy infrastructure to social enterprises. Our survey suggests that financial advisers and wealth managers increasingly recognise this, and are seeing the appeal of these strategies for a wide range of their clients.”

Investment companies have a number of advantages for ESG investing that are recognised by an increasing number of intermediaries. Nearly three-fifths (59%) of respondents agreed that the closed-ended structure of investment companies allows them to access high-impact assets that are not quoted on public markets, up from 52%last year. In addition, 47% agreed that the listed company structure of an investment company in itself provides greater transparency, up from 36% last year. 

One wealth manager commented: “To have a positive impact, in my view you have to do it in the primary market so you need to do it in private equity. So I think that impact lends itself very well to the investment trust wrapper because then you can start doing private equity and unlisted and illiquid long-term projects that could have a longer-term positive impact.”


Active versus passive

Intermediaries tend to favour active over passive strategies for ESG investing, and that attitude has hardened slightly since last year. 

Nearly three-quarters (73%) of respondents to the survey agreed that ESG investing was better suited to active funds, up from 69% last year. 


And less than half (41%) of intermediaries think that ESG investing can be achieved through passive funds, down from 43% last year. 

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