Only 1% of intermediaries trust funds’ sustainability claims

Just 1% of investment intermediaries “completely trust” sustainability claims made by fund managers, according to the Association of Investment Companies (AIC) recent ESG Attitudes Tracker.

Conducted by Research in Finance (RIF), the ESG Attitudes Tracker surveyed 400 private investors and 200 intermediaries between 7 July and 25 July 2025. Despite the tracker showing a “modest improvement” in sentiment towards ESG investing among UK private investors, persistent scepticism about sustainability claims have weighed on intermediary appetite, while poor performance and lack of client demand has also been a concern for advisers.

The FCA’s new fund labels under Sustainability Disclosure Requirements (SDR) – Impact, Focus, Improvers and Mixed Goals – have had some positive impact, with 28% of respondents saying they had increased their trust in such claims. However, a much greater number (60%) said they had had no impact.

One intermediary commented: “I haven’t really engaged. They could probably do more to publicise it.” Another remarked: “I don’t think clients are terribly aware,” according to RiF.

Of the four labels, Focus and Impact were the most likely to be used and understood, but over two-thirds (68%) of respondents said they had not used any of the labels yet.

General opinions of ESG investing have become negative for the first time with a third of respondents saying they were less favourable on ESG, whereas only 14% said they had become more favourable.

Only 11% of clients had proactively raised the subject of ESG in meetings, down from 13% last year and 20% in 2022, and the percentage of intermediaries who expect ESG demand to increase over the next 12 months has fallen from 60% last year to just 34% this year. 

See also: Transitioning to sustainability: The crucial role of emerging markets

Secondly, pessimism about the performance of ESG-focused strategies fell to new lows with only 10% of intermediaries expecting ESG investing to improve performance. Further, 51% said they expect ESG to worsen returns – indicating a net favourability score of -41%.

Nick Britton, research director of the Association of Investment Companies (AIC), said: “Intermediaries perceive ESG strategies to have lost money and their patience is wearing thin. Ongoing concerns about greenwashing don’t help, and knowledge of the new sustainability labels is still low. 

“The bottom line is that if intermediaries see a trade-off between ESG investing and returns, then returns are going to come first, unless clients have specific ESG requirements.”

Embedded

Despite the pessimism, ESG investing appears to remain embedded into how intermediaries carry out their business with over a quarter of respondents (27%) saying it is an embedded part of their philosophy and process.

The AIC/RiF added the overwhelming majority (96%) of those surveyed recommend sustainable funds, up from 89% last year, and intermediaries report that an average 16% of client assets are in sustainable funds, similar to previous years.

This article first appeared on Portfolio Adviser