More advisers are bringing sustainability into retirement planning

Pension savers and their advisers are increasingly keen to make sure retirement savings are invested in companies that have a positive impact on the world.

A new survey of 212 financial advisers in the UK has revealed that 43% consider sustainable investments when building retirement portfolios, an increase from a third (33%) last year. And a growing number of advisers are choosing to embed sustainable investing into their processes rather than simply being led by requests from their clients.

The research by Aegon also looked at whether the appetite for sustainable investing differs among advisers' client base.

Two thirds (66%) of advisers said that the preference for sustainable investing is the same for retirement advice clients compared to other clients, with one commenting: "My sense is that there is no real discernible difference between age groups. It's not the case that all young people want to invest sustainably, and the older people are not interested. That's certainly not my experience, my experience is that they're equally interested, regardless of age."

This issue has been in the news lately after screenwriter and co-founder of Comic Relief, Richard Curtis, launched Make My Money Matter -- a campaign calling for the trillions of pounds that are invested in UK pensions to go towards building a better world.

Instead of investments in harmful industries like fossil fuels, tobacco and arms, Make My Money Matter says it wants to make sure pension funds put people and the planet on a par with profit, with more pension investments going towards things like building wind farms, curing disease, making homes and driving innovation.

Many advisers expect that regulatory reform will push even more portfolios towards sustainable investing. The FCA will consult shortly on proposed rules to implement Sustainability Disclosure Requirements for asset managers and owners. This is expected to formalise requirements for suitability processes and will better support advisers by increasing transparency and improve consistency of fund labelling.

Generally, firms are prepared for regulation in this area with 81% of advisers saying there will be 'no', 'low', or only 'moderate' impact on future advice if regulation were introduced requiring advisers to consider client attitudes to sustainable investing.

"It's positive to see that more advisers are embedding sustainable investing into their processes and increasingly raising this with retirement clients," said Hilkka Komulainen, head of Responsible Investment at Aegon.

"There is still more progress needed but with new regulation on Sustainable Disclosure Requirements on the horizon, we may see an even greater number of assets move towards sustainable funds and solutions."

Komulainen added that a lack of standardisation in the industry means that advisers have faced challenges when dealing with the different sustainable investing considerations, but the new rules on the classification and labelling of sustainable investment products should better support advisers and their clients to make informed decisions.