The sustainable investment sector in the US has a market potential of $650 billion, with 69% of financial advisers seeing it as a growth opportunity for their practice, according to a survey.
Gateways to Impact, a report published by six organisations including the Calvert Foundation, the Rockefeller Foundation and Deutsche Bank, surveyed 1,065 advisers in the US.
It found that 38% expressed a strong interest in sustainable investment, with advisers claiming that they would recommend this form of investing to a third of their clients.
This, the report says, paves the way for a massive market potential of around $650 billion in the US alone.
Lisa Hall, president and CEO of Calvert Foundation, said, “People want to align their money with their values, and there is growing recognition on behalf of financial advisers that they need sustainable and impact investment products to offer their clients.
“This report shows that the firms that succeed in this market will be first to give their advisers the tools and education they need to effectively advise their clients on sustainable investment opportunities.”
The survey separates the advisers into five categories. Twenty-one per cent of them were classed as engaged, and displayed the highest level of interest in sustainable investment.
Clearly interested (16%) and curious (25%) also accounted for a large proportion of the total, whilst doubtful (25%) and uninterested (13%) completed the set.
The results of the survey clearly prove that financial advisers – the people at the forefront of the investment industry – are seeing that sustainable investments are important for the future of the planet and its people, and also for prosperity.
“Sustainability is no fad. In fact, it has become an essential part of business performance and competitiveness”, said William Crager, president of Envestnet, Inc., a sponsor of the report.
“The business world is changing. The need for efficiency feeds innovation in sustainable practices that are designed to lower costs and protect future supply and distribution chains.
“This study shows that advisers can lead by learning about sustainable investing and sharing that information with their clients.”
A recent survey of UK consumers by Oikocredit suggested that there might be a perception gap between ethical goods and ethical performance – something that could possibly be attributed to the performance misconceptions surrounding ethical or sustainable funds.
Similarly, 50% of advisers in the Gateways to Impact report highlighted insufficient track records as a barrier to making sustainable investment, whilst 47% picked out weak financial performance.
Forty-five per cent labelled insufficient client demand as a barrier, and 42% blamed the lack of research and knowledge from advisers.
In response to this, 54% of advisers wanted evidence of financial performance, 44% for details of client demand and 39% for longer track records. These factors in tandem, the advisers said, would inspire them to actively push sustainable investments more.
Whilst an increased adoption of the sector from an adviser level is much needed, it’s consumers that can make a real difference. Fill in our online form if you’re interested in getting expert advice about sustainable investment, and read our Guide to Sustainable Investment for free to get more information.