Research in Finance: 74% of DFMs and IFAs concerned about greenwashing

59% report lack of consistency in fund managers’ definitions

Morningstar to revamp sustainability ratings


Almost three quarters of financial intermediaries have expressed concern about greenwashing in asset management, according to a report from Research in Finance, a number which has only grown since 2019.

The survey, which interviewed over 200 discretionary fund managers and investment advisers, found an all-time high of 74% of surveyors were either “concerned” or “very concerned” about greenwashing in the industry, creeping up from last year’s 72%. This marks an increase of 20 percentage points since the question was posed in 2019, when only 54% showed concern.

Intermediaries pointed at a variety of causes for the hesitations to responsible investing, with 59% reporting there is a lack of consistency in fund manager’s definitions, 41% claiming fund research tools are lacking in the right information and filters, and another 41% concerned that responsible investments are over-valued. A lack of robust data sources was also listed by over a third of surveyors.

Jack Dominy, associate research director at Research in Finance, said: “The task that lies ahead is for industry provisions to catch-up with demand and provide clarity to all those involved.

“Transparency and simplification of sustainable investment strategies, highlighting tangible impact where possible, alongside more robust data sources, must be the next steps towards achieving some level of clarity in what has become a complex and opaque arena.”

Despite challenges within the industry, 95% of intermediaries also stated that their clients hold some sort of responsible investing fund. The Financial Conduct Authority is also set to launch Sustainability Disclosure Requirements for the UK in autumn this year, which aims to create more precise definitions of what qualifies as a sustainable investment.

“Two-fifths of intermediaries reported an increase in demand for responsible investment from their client base, from our latest research, driven by greater awareness of climate issues and high levels of media coverage,” Dominy said.

“This is on top of even stronger demand seen over the previous two years. Whilst this demand reflects a positive sentiment overall towards responsible investing, obstacles still exist. The road ahead for responsible investing is not an easy one.”

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