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

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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