THE SUSTAINABLE FINANCIAL ADVISOR

Advisor | March 2021

Many words are spent on sustainability and ESG investments. Hopefully, we will soon move from words to deeds. 

Our daily lives, every action made by businesses and families every year need to be sustainable and the strategies followed by the leaders of the world need to be sustainable as well. 

So, for the financial advisor to become a healthy carrier of sustainability is not an option anymore, but a necessity before even being a duty. 

It is a necessity because clients require sustainability, especially the wealthiest one. 

ESG investments represent an excellent opportunity to contribute to convert the huge amount of liquid assets on current accounts, especially those owned by the wealthiest sections of the population – i.e. affluent and private segments, who own 85% of the Italian wealth. 

The level of knowledge on issues concerning ESGs has been increasing over the past 24 months. After the start of the pandemic, its growth has significantly sped up (+20%).

A FINER survey carried out for NORDEA brought to light how the level of awareness towards environmental issues (E) is even among end investors (92%). On the other hand, the level of awareness towards issues pertaining to governance (G) and social impact (S) is higher among wealthy people (88% and 76% vs. 61% and 42% respectively).

Reluctance towards underwriting ESG investments is especially linked to lack of knowledge (59%) and the mistaken belief that ESG investments generate lower revenues (34%).

Of course, having ESG tools is not enough to be sustainable. 

Sustainable financial advisors have the responsibility of explaining and informing their clients on the meaning and importance of ESG investments. Moreover, they need to inquire about sustainability and certify their skills. 

The most important European certification body – EFPA – has recently launched an ESG certificate, thus underlining the importance of skills in this field.

On 10 March, the SFDR (Sustainable Finance Disclosure Regulation) will enter into force. SFDR is a European regulation that requires financial market participants and financial advisors to provide ESG-related information. 

The SFDR is going to have a meaningful impact not only on disclosure requirements, but also on investments, organization and compliance processes. 

The distribution system is responsible for the success of ESG investments. The ground has never been so fertile: reaping the benefits in the interest of our planet and its inhabitants is up to financial networks and banks.  

Nicola Ronchetti

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