The AIC’s most recent ESG Attitudes Tracker has revealed that confidence in new FCA sustainability labels is rising. According to Research in Finance’s annual IFA Magazine survey, 64% or two-thirds of intermediaries believe that the sustainability labels will boost their trust in sustainability claims.
The sentiment that the FCA’s new ESG labels will increase trust in corporate claims of sustainability was strongest among wealth managers (78%), followed by financial advisors at 55%. 63% of private investors reported that the presence of ESG labels increased their trust in sustainability claims, with 71% of private investors who already hold sustainable investments responding positively to the labels.
After polling 202 intermediaries, the survey found that the Sustainability Focus label was the most popular at 54%, followed by the Sustainability Impact label, with 52% of the intermediaries indicating they would use it for screening. The Sustainability Impact label ranked third at 52%, with Sustainability Improvers and Sustainability Mixed Goals trailing at 47% and 37%, respectively.
ESG investing has become more prevalent in the finance world over the past decade as investors increasingly seek more sustainable investment opportunities. Incorporating environmental, social, and governance considerations into corporate strategies is a great way for companies to make sustainability a part of their operations and attract ESG-focused investors.
But with some firms misrepresenting their ESG activities to paint a rosier picture of their sustainability efforts and mislead shareholders, a growing number of wealth managers and financial planners don’t trust corporate claims of sustainability. ESG sustainability labels have shown that they are undoing some of the damage these unscrupulous companies have caused and increasing intermediaries’ trust in sustainability claims.
Even so, the fact that very few funds currently have such labels is of major concern to intermediaries, as is the potential effect these labels could have on the funds intermediaries are already using. Wealth managers have even raised concerns about the uncertainty surrounding the placement of these funds.
AIC Research Director Nick Britton says that while wealth managers and advisors have cautiously welcomed the FCA’s new ESG labels, it is still unclear whether the volume of ESG-labeled funds will ever be large enough for investors to build portfolios. Furthermore, Britton noted that there are questions regarding the placement of funds that are presented as sustainable but do not have an ESG label.
The ESG Attitudes Tracker also found that opinions regarding ESG investing seem to be stabilizing. 57% of intermediaries reported zero changes to their ESG investing opinions since 2023 and 73% said they believe investments should also have a positive effect on top of providing a good ROI.
As more people continue to watch out for firms that are conducting their business in a sustainable way, entities like Coyuchi Inc. are likely to see their investor and consumer base growing within this discerning group of eco-conscious people or investment firms.
NOTE TO INVESTORS: The latest news and updates relating to Coyuchi Inc. are available in the company’s newsroom at https://ibn.fm/COYU
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