More than 80% of IFAs rank ESG considerations as important for client portfolios compared to 65% this time last year, according to a new study.

The research, conducted with 100 IFAs, also found that 28% say ESG considerations are now ‘very important’.

The research was carried out by infrastructure and private equity investment manager Foresight Group LLP.

The company says its study also found that UK retail investors were gradually embracing ESG concerns, albeit more slowly than IFAs.

Overall 12% of IFAs say that over half of their clients now express a preference for ESG investing, compared to 9% in 2020.

However IFAs said for further growth ESG needs education with 45% saying that education sessions would encourage better adoption of ESG funds.

Advisers expect that half of their clients will be invested in portfolios in which ESG is a core component in an average of about 4.7 years.

Nearly half of IFAs said that their greatest challenge in terms of ESG take up is the lack of an industry-wide definition of ESG investing.

Lack of an industry-wide ‘gold standard’ for ESG criteria and a lack of transparency when reporting ESG activity were also each cited by 20% of respondents.

The study said that one asset class with significant sustainability potential is real estate. A significant minority (33%) of IFAs in the research reported an increase in appetite for ‘sustainable’ real estate.

Mark Brennan, partner at Foresight Capital Management, said: “We are enthused to see that IFAs are increasingly open to joining the global movement towards sustainable investing.“