Most consumers don’t trust ESG investment products: report

An overwhelming majority of people expect sustainable financial services to become the norm (93%) and almost half expect this to be the case by 2025, according to research by PA Consulting.

The downside is that consumers are currently facing a critical knowledge gap – which should serve as a wake-up call to financial services providers to accelerate their efforts to both educate and innovate around ethical and sustainable finance options, the consulting firm advised.

3,500 consumers globally were surveyed for this report which found two thirds (63%) of consumers are looking for more sustainable options for products and services and over half are more likely to buy financial products from providers who demonstrate sustainable values.

Only a third of people (33%), however, think that their personal finances can have an impact, and only forty-two percent have considered investing as a way to positively impact the environment.

Pricing (62%), trust (57%), availability (56%), and accessibility (55%) are also key barriers to the adoption of sustainable finance products.

On top of this, 55% of consumers think that it’s not fair to pay a premium for sustainable products or services, and over half (53%) think that financial institutions are absent from the ESG discussion despite having a key role to play (64%).

PA Consulting is urging financial services firms to address gaps in knowledge and consumer trust to drive adoption over the next four years and seize the sustainable finance opportunity whilst cementing their position as positive social actors.

Mark Lancelott, sustainability expert at PA Consulting, commented: “Our survey reveals a worrying gap between consumers’ expectations of their financial services providers and their confidence in, and understanding of, the products currently available to them.

“Right now, consumers don’t realise how big an impact their financial choices can have on their ambitions to live more sustainably – which can be multiple times more impactful than other lifestyle changes – and there is too little choice and education available. But they are increasingly looking to ‘make their money matter’ and providers need to step up – and fast – if they are to seize the opportunity, engage and retain new conscious consumers, and build their reputation as positive social actors.”

Jason Hill, financial services expert at PA Consulting, added: “Pressures to meet the challenge of making sustainable finance mainstream by 2025 will come not just from consumer demand; there’ll be new non-financial reporting requirements and rules to prevent ‘green-washing’ coming into force imminently, while other banking regulations are likely to incorporate sustainability and ESG measures.

“Our research highlights the pent-up demand for financial products and services that have a positive impact. Failing to meet expectations will compromise customer retention, the ability to meet increasing regulatory requirements, profit, and scope for financial services organisations. There are three core initiatives businesses must commit to pursuing to have the greatest impact: build credibility, educate, and innovate. It will take investment and ingenuity, but it is critical the industry pivots, now.”