In the ever-evolving world of finance, ESG investing has been riding a rollercoaster of popularity. Once the darling of the investment world, it has recently faced negative press. Yet, financial advisors across Europe find themselves at a critical juncture: how to navigate the complex landscape of sustainable investing amidst changing client attitudes and persistent regulatory pressures.

To shed light on this conundrum, Nordea Asset Management conducted a survey across Germany, Spain, Italy and Switzerland—delving into the current state of ESG investing. The goal was to uncover the true interest levels of both financial advisors and their clients, identify the dominant themes in sustainable finance, and understand the primary motivations and barriers influencing investments in ESG funds.

Conducted by CoreData ,the Nordea ESG Adviser Survey 2024 results offers advisors insight into how to navigate this dynamic moment to engage with clients on sustainable investing.

The survey reveals a nuanced picture.

EU regulations continue to mandate ESG considerations, making it an unavoidable topic in client conversations. Moreover, the long-term impact of ESG factors on company performance remains a crucial consideration for forward-thinking advisors. Interestingly, the findings suggest that while some clients have grown weary of ESG rhetoric, others are becoming increasingly conscious of their investment impact. This dichotomy presents both a challenge and an opportunity for financial professionals.

Overall, advisors in the countries surveyed remain committed to ESG, with 59% showing strong interest, and 34% planning to increase their recommendations for ESG investments over the next year. Climate change is the most discussed ESG investment theme across markets (68%), particularly renewable energy, which resonates with 75% of clients. Interest in measurable ESG outcomes is growing, with 60% of clients occasionally or frequently asking for tangible results.

European investors in ESG expressed a desire to exclude companies that do not meet their ethical standards and an eagerness to drive positive change through investments. In both cases two-thirds of the investors saw this as a main reason to invest in ESG funds. On the other hand, those that do not currently invest in ESG solutions said they are deterred by scepticism about the benefits of ESG funds (61%) and concerns over lower investment returns (57%).

Key Findings

• Germany: The interest of German advisors in ESG has rebounded this year, with 51% reporting strong interest, a 12% increase compared to 2023. This aligns with their observation of solid client interest in ESG (75%) and has led 30% of advisors to plan to increase their recommendations for ESG solutions over the next 12 months. The primary motivation for clients investing in ESG funds is to avoid companies whose ethical standards they do not support (73%). Climate issues remain the dominant topic in client discussions about ESG investing (73%), followed by green/clean tech (72%), while social challenges play a minor role (11%).

• Spain: Advisors in Spain report that client interest in ESG is slightly up from last year, with 82% showing strong or moderate interest. Advisors state that ESG appeals to investors for both alignment with personal values and the potential for better returns. Notably, close to two-thirds of Spanish advisers emphasise investment returns as a key motivator, nearly double the percentage of other countries.

• Italy: Interest in ESG among financial advisers has remained on par with 2023 (64% show a strong interest), whereby 36% plan to increase their recommendations of ESG solutions. They see 70% of their clients seeking to bring about positive change through with their investments. When asked about social themes, 59% of Italian clients identified Diversity and Inclusion as a key focus. For 54%, the lack of clear metrics is a major barrier, underscoring the necessity to quantify ESG benefits.   

• Switzerland: Swiss advisors are leading in support for ESG, with 68% expressing strong interest. They report consistent demand from clients and actively discuss ESG topics with 81% of their clients. Climate change is the most frequently discussed ESG theme (62%) with clients. Within the climate theme, Swiss clients prioritize new technologies to accelerate the transition to a low-carbon economy (69%). The primary motivation Swiss clients give for investing in ESG is a desire to create positive change (71%). For those who do not invest in ESG solutions, concerns about potentially lower returns are the primary barrier (70% ).  

ESG expertise continues to offer a competitive edge in a crowded market, and staying ahead of the curve in this evolving field is crucial for long-term success. At Nordea Asset Management, we have been integrating ESG and sustainability for over 35 years. Our team of seasoned professionals has developed a robust approach where returns and responsibility go hand-in-hand. As an ESG leader, we offer clients a broad range of responsible products, across all asset classes, designed to have a positive impact while aiming to deliver attractive returns.