ESG investing is becoming a key part of clients’ investment decisions and is no longer a marginal option for a few, according to findings from Royal London Asset Management’s annual investment conference.

RLAM surveyed around 100 wealth managers, financial advisers and institutional clients and found that, over the next three years, just short of two thirds (65%) expected to allocate more capital to investment strategies which explicitly take Environmental, Social and Governance (ESG) considerations into account.

In addition, more than 70% of clients highlighted that ESG issues were now “somewhat” or “very” important to them when selecting an investment strategy or fund manager.

One surprising finding from the survey was lower levels of concern about Brexit.

While 22% saw it as the biggest threat to investing during 2017 that number had halved to 11% this year.

The conference also looked at the biggest challenges facing markets during the coming year.

Rising interest rates and inflation were ranked as a key concern for 40%, a jump from the 26% who highlighted this in 2017.

A further 12% highlighted the risk of corporate defaults, while 22% pointed to concern over trade wars. 
 
Rob Williams, chief distribution officer at Royal London Asset Management, said: “The findings of this survey mirror many of the discussions we’ve been having with clients over the past year and show that ESG is increasingly becoming an integral part of the investment process for many advisers and institutions.

“As the sector becomes increasingly competitive, we think that advisers will begin to dig much deeper into what these approaches really mean for the underlying funds.
 
“The debate is already shifting rapidly from whether a fund simply considers ESG issues, to a more sophisticated discussion about how investment strategies implement these considerations on a practical level.” 

He added: “We think that fund management firms have an important role to play in helping advisers get to grips with investing sustainably and helping them to educate their clients on the tangible benefits that this can provide.”