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FAs: Poor ESG Compliance Info Impediment to Recommendations

June 29, 2018

Financial advisors say the quality of information about environmental, social and governance-oriented companies is making it harder for them to incorporate ESG investing into their offerings, according to a recent Cerulli Associates survey cited by FA magazine.

Advisors are facing growing pressure to provide ESG, socially responsible and impact investing options, but they’re not getting what they need from the firms that claim to represent such strategies, according to the report cited by the publication.

In 2017 90% of advisors and asset managers said offering ESG and SRI investing was at least a moderate priority for them, Cerulli says, according to FA magazine. Yet 94% of advisors and asset managers blame the challenge in steering investors to ESG on the fact that companies only offer “limited or selective information” about how they’re engaging in ESG, according to Cerulli’s survey of 436 advisors and asset managers, the publication writes.

And 77% of the respondents claim the information provided to them is too subjective, according to the survey cited by FA magazine.

Outside research firms fill only some of the gap: 65% of advisors say they don’t have enough third-party analytics data to understand the ESG firms, while 59% are suspicious of the data’s credibility, Cerulli found, according to the publication.

Sixty-two percent of respondents say it’s hard to get the risk and quantitative data necessary to compare investments, according to the survey, FA magazine writes.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.