Two thirds of financial advisers are investing more of their clients’ money in dedicated ESG propositions in comparison to a year ago, according to a new report.

Just 1% of advisers said they are choosing to invest less into ESG options, according to the 2020 Financial Adviser survey report from FE fundinfo.

Almost three quarters (73%) of advisers said their clients are more interested in ESG investing compared to last year. In the 2020 survey, advisers said ESG investing was mainly being driven by a combination of investor demand and institutional sales pressure.

Over three quarters (76%) of the advisers surveyed said they expect their clients to have more than a quarter of their portfolios invested in ESG funds within the next five years.

Advisers were also increasingly building their own ESG offerings. Two thirds (65%) said they have a dedicated ESG proposition already in place, while a further 26% were planning to introduce one shortly. Of those who do already offer ESG financial advice to their clients, just over a quarter (26%) said their propositions have been custom built, while a further 24% said they outsource their ESG function to investment specialists.

The largest barriers preventing advisers from promoting ESG investing to their clients were the lack of a clear set of standards and definitions (62%), a lack of readily available data solutions (52%), and the potential for ‘greenwashing’ (52%) whereby a company conveys false or misleading information about how environmentally or ethically sound their products or services are.

According to the report, advisers are adopting different approaches in terms of the due dillkigence they carry out on ESG investments. Over half (62%) said they use screening tools on investment planners, while slightly more than half said they review an individual fund’s documents. Nearly a third (29%) said they review a fund’s holdings at base level.