Although funds that broadly fit within the environmental, social and governance universe have grown rapidly in recent years – to the point where they now account for around 5 per cent of the total assets of UK retail funds – in a world of exceptional volatility, can an adviser really think long term about sustainable investing?

For Kate Elliot, head of ethical, sustainable and impact research at Rathbone Greenbank Investments, the regulatory outlook for providers is unlikely to look radically different to the sustainable finance disclosure regulation deployed in EU countries.

The UK government is presently consulting on its own proposals, and while Elliot does not expect it to differ much from the EU legislation, she does expect the requirements placed on advisers to change further, with an increased obligation to ask clients about their sustainability preferences, rather than wait for the client to ask.

She says: “Many clients don’t like to bring it up, so a change that further requires the adviser to start the conversation will have an impact on the market. We may also see some clarity around the definitions, around what is a sustainable fund compared to an impact fund etc. But that taxonomy, that should be the floor, the minimum in terms of what sustainable investment products are trying to achieve.”

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