# Closing the sustainable investment gap Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-05 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Closing the Sustainability Gap: Impactful Sustainable Meta Description: Learn how to bridge the 'sustainability gap' in investing, aligning values with financial goals. Discover key strategies and insights for sustainable URL: https://financedigest.com/closing-the-sustainable-investment-gaphtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-647607282-1736815506238-compressed.jpg) _![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/407-1736815506195-compressed.jpg)_ _By **Richard Gillham,** Financial Planner at_ [_Progeny_](https://theprogenygroup.com/) [Recent research by Aegon](https://corporate-adviser.com/mismatch-between-investors-intent-and-action-on-esg-aegon/) found that nearly 60% of investors surveyed wanted their money to be invested sustainably, but only about a third had actually taken steps to achieve this. This is the ‘sustainability gap’. It’s where the sustainability instinct is identifiable in other areas of their day-to-day life, (e.g. recycling; avoiding single use plastics; buying local produce) but does not translate into investing in funds that have sustainability criteria built in. The fact that the sustainable [investment industry is still in its infancy explains some of the mismatch between desire and investment reality but it’s also a product of the lack of in-depth understanding amongst](https://www.financedigest.com/investment-in-mental-health-amongst-cybersecurity-professionals-set-to-increase-according-to-infosecurity-europe-poll.html "Investment in mental health amongst cybersecurity professionals set to increase according to Infosecurity Europe poll") retail clients. **Why it matters** This matters because better alignment between people’s underlying sustainability philosophy and their choice of sustainable investments is likely to have a positive [impact on their attitude to financial](https://www.financedigest.com/how-mifid-ii-will-impact-financial-advisor-communications.html "HOW MIFID II WILL IMPACT FINANCIAL ADVISOR COMMUNICATIONS") planning. According to UBS’s latest [Own Your Worth](https://www.ubs.com/global/en/media/display-page-ndp/en-20220512-own-your-worth-women-pursue-greater-purpose.html) report, nine out of 10 women surveyed believe that money is a tool that can be used to enable them to make greater impact in the world. In this context, [sustainable investing](https://www.financedigest.com/where-next-for-sustainable-investing.html "Where next for sustainable investing?") could be seen as an important factor in closing the gender investment gap. It’s also fundamental to engaging the younger generations, as millennials, post-pandemic, are leading the [way in their appetite for sustainable investing](https://www.financedigest.com/10-ways-to-put-together-a-killer-investment-pitch.html "10 WAYS TO PUT TOGETHER A KILLER INVESTMENT PITCH") and Gen Z are characterised by the importance they place on sustainability in all areas of their lives. There are a number of [ways we can tackle the sustainability](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") gap. **Raising credibility** ‘Greenwashing’ is a growing concern for investors, amplified by recent headlines undermining the integrity of [ESG approaches](https://www.financedigest.com/a-holistic-approach-to-esg-is-the-best-chance-of-success-in-a-competitive-private-equity-investment-market.html "A holistic approach to ESG is the best chance of success in a competitive private equity investment market") at certain fund groups, and fuelling the need for standardised, independent, third-party sustainability ratings. Until this happens, advisers play an important role in explaining the broader sustainability context, backing approaches where sustainable factors are fully integrated into the [investment process and clearly articulating their features and benefits](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES"). The objectives of the [fund must be clearly stated and, in my experience, investors also want to hear from the fund manager](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") themselves.  It’s also important to dig deeper, in clearly [stating the fund’s holdings](https://www.financedigest.com/india-to-hold-one-day-state-mourning-on-passing-away-of-queen-elizabeth.html "India to hold one day state mourning on passing away of Queen Elizabeth"), and to provide that third-party validation. **Increasing education** Advisers can also help educate [clients more broadly around sustainability to aid](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out billion aid package for Italy clients hit by surging prices") their understanding of what are often complex issues. For example, there are many different responsible investment approaches, from ethical screening to climate indices, to fully integrated [ESG and impact investing](https://www.financedigest.com/non-finance-data-sets-increasingly-sit-at-the-heart-of-investment-with-over-70-of-decisions-impacted-by-esg-factors-bright-data-research-reveals.html "Non-Finance Data Sets Increasingly Sit At The Heart Of Investment With Over 70% Of Decisions Impacted By ESG Factors, Bright Data Research Reveals"). To do this, the advisory population also [needs to improve its own understanding of sustainable investing](https://www.financedigest.com/5-reasons-why-women-need-to-get-into-property-investing.html "5 Reasons why women need to get into property investing") terminology, evolving regulation, risk factors, and different approaches to integrating sustainability factors into the investment process.  By developing their own expertise, advisers will instil more confidence in clients through the ongoing sustainability discussion. An additional issue is that fund managers typically assess a company’s sustainability or ESG credentials based on a balanced scorecard across multiple factors, whereas consumers tend to focus on a single issue such as plastics, fossil fuels or the [living wage](https://www.financedigest.com/pensions-awareness-day-could-you-get-by-on-less-than-living-wage.html "Pensions Awareness Day: Could you get by on less than living wage? "). These different perspectives can create confusion. Advisers have a clear and [present responsibility to explain the differences and what each investment approach is designed](https://www.financedigest.com/product-design-verification-and-validation-solution-market-2021-present-scenario-and-growth-prospects-2025.html "Product Design Verification And Validation Solution Market 2021 | Present Scenario and Growth Prospects 2025") to achieve.  This will enable people to make better-informed [decisions that more closely align their beliefs with their investment actions](https://www.financedigest.com/tf1-to-take-action-against-vivendis-canal-over-decision-to-stop-airing-its-programmes.html "TF1 to take action against Vivendi’s Canal+ over decision to stop airing its programmes"). **Leading by example** There’s also the argument that advice firms should seek to close the [sustainability gaps in their own businesses](https://www.financedigest.com/which-kpis-should-a-budding-business-focus-on-for-sustained-growth.html "Which KPIs should a budding business focus on for sustained growth?").  The decision to appoint sustainability champions across a [business](https://www.financedigest.com/nfts-live-streams-sustainable-businesses-and-social-shopping-what-to-prioritise-in-commerce-this-year.html "NFTs, live streams, sustainable businesses and social shopping – what to prioritise in commerce this year") can help drive buy-in and acts as a springboard for employee-led sustainability initiatives. This also puts a strong emphasis on internal training, engagement and development. Achieving [B Corp](https://bcorporation.uk/) accreditation is one such way to show a balanced philosophy and recognise the breadth of stakeholders, from the environment to employees, in a business. A company must undergo the verification process every three years in order to recertify, so they [need to really live these sustainability](https://www.financedigest.com/why-coding-needs-to-be-re-evaluated-for-sustainability-objectives.html "Why coding needs to be re-evaluated for sustainability objectives") values. **Doing well and doing good** Many savers have strong [views on issues of sustainability](https://www.financedigest.com/bafin-guidance-on-sustainability-risks-a-practitioners-view.html "BaFin Guidance on Sustainability Risks – A Practitioner’s View") or social justice, but they do not feel empowered to reflect those views in how they invest. The responsibility and opportunity for advisers is to inform and educate, to solve that lack of understanding and confidence. An ever-growing number of clients want an [investment model which does well and does good and as centres](https://www.financedigest.com/buyers-shun-city-centres-for-country-villas-when-it-comes-to-lifestyle-investment-in-iberia.html "BUYERS SHUN CITY CENTRES FOR COUNTRY VILLAS WHEN IT COMES TO LIFESTYLE INVESTMENT IN IBERIA") of influence, advisers have a critical role to play as the gatekeepers of private client capital. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---