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        Sustainable Investing

        Getting Past the Greenwashing: Helping Clients Navigate Sustainable Investing With Confidence

        Sustainable investing has made its way into conversations with financial advice clients more frequently in recent years. But with increased interest comes more questions about product options and impacts as well as concerns. Many investors want to understand which products are genuinely sustainable and they expect financial advice to provide the answers.

        Our latest research highlights the growing importance of clear, informed advice on this topic. As regulation evolves and clients become more engaged with sustainability themes, financial advisers have a key role to play in cutting through the noise and helping clients make informed decisions.

        Rising Interest, Rising Scrutiny

        Sustainable investing continues to gain ground in Australia, with responsible investment assets now making up 41% of the domestic managed funds market, according to the 2024 Responsible Investing Association of Australasia (RIAA) Benchmark Report. That’s a 24% increase in just one year. At the same time, regulatory oversight has stepped up. Since providing guidance in 2022, Australian Securities and Investments Commission (ASIC) has taken an increasingly active role in addressing greenwashing in financial products. In 2024 alone, multiple providers faced significant penalties for misleading or overstated sustainability claims.

        These developments have had a significant impact across the industry. The RIAA survey also revealed that 52% of sustainable investment product providers had greenwashing concerns in 2023 – up from 45% the previous year. This shift creates both a challenge and an opportunity for advisers. Clients want to invest according to their values — but many are hesitant without reassurance that their chosen products are genuinely aligned with their sustainability goals.

        What Clients Think

        Our research underscores investors’ concerns regarding these risks. Among current sustainable investors, greenwashing is now the second most frequently cited concern after investment performance.
        This reflects demand for greater transparency to counter these greenwashing concerns. Sustainable investors want to understand how their money is being used, what types of outcomes it supports, and whether products are delivering on their stated objectives. Many are committed to sustainable investing but only if they feel confident that their investments are true to label.

        The survey also highlights that clients are seeking support and guidance from professionals. Financial advisers were ranked as the number one source of sustainable investment information — ahead of product providers, digital platforms, or other intermediaries. That puts advisers in a strong position to help clients navigate the complexity and earn their trust in this space.

        Managing Complexity, Building Confidence

        Advisers can equip themselves to play this role. Through client conversations, research, and developing financial advice strategies, they are already translating complex information into clear, actionable insights. Sustainable investing requires the same discipline, along with an understanding of how sustainability factors are integrated into product design, and how sustainability objectives need to be balanced with portfolio performance, risk, and diversification.

        Clients aren't just asking whether a product has a sustainability rating or labels. They want to know:

        • How the strategy works
        • Whether sustainability is a core part of the investment process
        • How performance has been tracked over time
        • Whether reporting and disclosures support the claims being made

        By taking time to review these details, advisers can steer clients towards better-aligned, better-constructed options.

        Looking Ahead

        As new sustainability disclosure standards roll out in Australia in 2025 and beyond, availability of consistent, comparable sustainability data is expected to improve. This will support better analysis and more informed product selection. But the need for informed, professional guidance will remain. Clients will still be looking for help in making sense of the data, understanding their options, and aligning sustainable choices with financial goals.

        That’s why sustainable investing knowledge and experience is becoming a key part of the adviser toolkit. It’s not just about responding to a trend – it’s about offering support and expertise at a time when clients are seeking both.

        To explore more insights.

        Download the white paper

        About the Research

        The 2024 Sustainable Investing Report was commissioned by Investment Trends. The quantitative online survey was carried out in October 2024. The sample after data cleaning and validation was 1,010 investors.

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