It suggests questions such as, 'what are your political and ethical views when investing your money?' and 'what would you like to achieve from your investments?'.

Help is coming

The FCA is working on a sustainable disclosure regime, which Coates says will make it easier for advisers to advise on ESG. 

The rules are expected to come out in the fourth quarter of this year and will encompass a set of fund labels for ESG funds.

They will come out alongside anti-greenwashing rules, which will further protect investors and their advisers, as they seek to catch out funds that do not describe themselves in a fair and clear way.

The industry is expecting three labels: sustainable improvers (for the mass market), sustainable focus, and sustainable impact. 

Head expects the new regime to “provide advisers with confidence that this aspect will no longer fall upon them in relation to greenwashing, and will also help them to match their clients’ wishes with suitable solutions.”

MacDonald agrees the regime should make the work of an adviser more straightforward. “It will give a very quick point of reference as to whether funds that take ESG into account are ‘lighter green’ or 'darker green', so should make identification and selection of funds much easier,” he says.

Coates also agrees advisers who are compliant in their KYC process would benefit from the new rules.

For those who do not raise the ESG question he has a warning, however: “All funds will have to issue a sustainable disclosure statement, which means that if a fund doesn’t have a label it’s not doing sustainability, but it has to disclose why or the fact that it isn’t doing sustainability.

"If that’s the first point that you are having a conversation with the client [about their sustainability preferences] I would suggest you change your advice process very quickly because that isn’t going to work.”

carmen.reichman@ft.com