Sustainable investing: Asking the right questions

Assessing a client’s attitude to sustainable investing is not as simple as asking one question.

For some advised customers, sustainable investing will simply not be of interest.

As a financial adviser, you may already know (or suspect) that some of your customers fall into this category, whether through your existing relationship with them or through due diligence processes. 

The same applies in reverse: you may already know of customers who are eager to put money into sustainable investments.

In either case, it may be tempting to assess the importance of sustainable investing simply by asking: “How important is sustainable investing to you?”However, from a regulatory standpoint, staking your entire assessment of this major part of the investment landscape on the answer to one question will not be enough. The Financial Conduct Authority (FCA) has placed suitability at the heart of its approach to regulating the retail investment industry, meaning that advisers can expect far more scrutiny of this area in the future.

In addition, there are several important reasons why advisers need to take their customers’ attitude to sustainable investing seriously, regardless of what they think the outcome might be.

  • A complex landscape

As sustainable investments have become a core part of the financial services industry, the range of products available has increased exponentially. This means there are a range of broad and niche investment strategies to choose from, many of which didn’t exist just a few years ago.

Ensuring that customers understand the options available to them (and what they may be missing out on) will require explanation.

  • Impact investment

As the FCA has pointed out previously, customers can conflate the concept of ‘sustainable investments’ with strategies that demonstrably “achieve a measurable real-world impact”.[1]

However, true impact investing is just a small part of the much broader sustainable investment universe. Customers may find themselves dissatisfied with a fund that takes a more passive approach to sustainable issues.

In addition, recent regulatory proposals clearly indicate that customers will need to not only express a view on what they want their funds to invest in, but also the approach taken by the fund manager. The FCA’s proposed fund labelling regime consists of four categories based on the broad approach of the fund manager.[2] This will require a sufficient understanding of a customer’s attitude on the part of the adviser.

  • Beyond climate change

Many people – including investment and finance professionals – tend to conflate the ‘ESG’ acronym with environmental issues, and in particular climate change. However, it covers a far wider range of issues, many of which could be of interest to investors.

For example, under the ‘S’ of ESG (social issues), investors may be interested in allocating to social infrastructure funds or social housing funds that can produce financial returns while also supporting affordable housing, healthcare and education.

Our own research[NR1] , analysing the sustainable investing attitudes of a representative sample of the UK population, has also shown that people who express an interest in sustainable investing tend to prioritise environmental concerns. Far fewer people prioritise governance or social concerns.

Without a robust assessment of customers’ sustainable investment attitudes, advisers risk missing out on appropriate opportunities in areas that customers may not even have realised they could invest in.

  • Avoiding biased responses

Asking just one question leaves an adviser open to a biased response. Some customers may feel uncomfortable disclosing whether they do or do not have an interest in this area. They may also gravitate towards an ‘average’ response, either because they do not understand the question or they do not want to stand out.

To make a proper assessment of suitability, an adviser needs their customer’s genuine response, not the ‘face’ that the person may wish to display to the world.

A robust assessment

To achieve reliable and repeatable results that can stand up to regulatory scrutiny, advisers need to ask a series of questions to assess the suitability of sustainable investments for their customers.

At A2Sustainability, we have developed a robust, straightforward questionnaire designed to facilitate an informed discussion between advisers and customers on sustainable investing. The questions have been repeatedly tested for understanding, speed and accuracy, and it takes less than five minutes to complete.

The Attitude to Sustainability Questionnaire can help you help your customers to make informed, appropriate decisions about their investment portfolios. For more information about how we do this, please get in touch.

[1] See: FCA Occasional Paper 62, ‘Matter of fact-sheets: improving consumer comprehension of financial sustainability disclosures’, October 2022. Link:

[2] See: FCA Occasional Paper 62, ‘Matter of fact-sheets: improving consumer comprehension of financial sustainability disclosures’, October 2022. Link:

 [NR1]Could add a link here to the A2S website?

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