ESG - Framing the conversation with your clients

Updated on 13/03/2026

By Michael Hayes, Irish Life

This article has been taken from the November 2023 edition of The Advantage Magazine. 

Key Takeaways:

1. ESG conversations should move beyond compliance. While regulation such as IDD requires advisers to capture sustainability preferences, meaningful discussions are more effective when framed around client values, long-term risk and real-world impact.
    
2. ESG is now mainstream investing. What began as socially responsible investing (SRI) has evolved into core investment practice, with ESG factors increasingly integrated into research, portfolio construction and risk management.
    
3. Incorporating ESG can support long-term outcomes. Environmental, social and governance considerations can influence performance, manage emerging risks such as climate change, and align investment decisions with the expectations of the next generation of investors.

I’m often told when I ask brokers about whether their clients express an interest in ESG that they don’t care. The question is usually met with the same response, that few people mention it and it’s not important to the majority of their clients.

The IDD directive in 2022 made it a requirement for brokers to incorporate their clients' sustainability preferences when discussing investment products and was the first formal regulatory nudge in this area, and is unlikely to be the last.

While the regulatory approach is trying to change behaviour it’s not always the stick that works best to bring about change and is often seen as just ticking a box.

Maybe we should reframe our approach in this area to include more open and relatable questions like “Are you concerned about the impacts of climate change?” or “Do you think companies should behave in a responsible way as to their impact on the environment around them?" "Do you think that the way companies treat their employees and other stakeholders is important?” and “Do you realise you can, through your investment selection, indirectly hold companies to account for their actions?”

It's unlikely we would be met with resistance to any of these questions so maybe this is a better starting point to position the importance of ESG or Responsible Investing. If we then follow up with a statement that investments can be managed in a way that factors in these considerations, we can make the link between behaviour and action.

There is no doubt our everyday behaviours tells us that we already care about these issues, whether that is the ‘E’ in ESG that is recycling as much as we can or moving to more sustainable transport options, to the ‘S’ and ‘G’ where if you found out that your local coffee shop were not paying their suppliers fairly and treating their employees poorly, it’s likely you’d find a new shop.

The fact that we are already thinking along these lines means extending the same thinking to how our wealth is managed is not that far a stretch.

ESG has come a long way in the last 20 years, from a niche activity known as Socially Responsible Investing (SRI) to something that is now seen as a part of core investing.

As investors have slowly recognised the commercial imperative that investing well can also be good from a business perspective, ESG, and more broadly Responsible Investing, is now a factor that most asset managers consider in their research, investment selection and even risk management.

The continuing trend in this direction has seen a wide adoption of the notion that investing can be about sustainable capital allocation and sound stewardship of that capital. In turn this can also see investors more mindful of how their own investments are managed.

What started decades ago as a niche effort to align investors’ portfolios with their values through the exclusion of ‘sin’ stocks, has become a mainstream movement to assess the risks and opportunities of ESG issues across all investments. There is now an enhanced emphasis on understanding the deep, complex relationships between business, industry, society and the environment, but also widespread recognition that sustainable investing is an integral part of responsible investment management.

We all have a responsibility to create long term sustainable returns for our clients and incorporating environmental, social and governance (ESG) factors can have an impact on the performance of our clients' investments, and that the management of ESG risks and exploitation of ESG opportunities, particularly for a portfolio-wide issue like climate change, can also add value to a portfolio.

Our clients trust us with their investments and to deliver on our core promise to them – to deliver better futures, that is our priority, and we can do this but at the same time factor in the responsible impact of our investment decisions. This is a trend that is likely to intensify over the coming decades as large amounts of wealth passes to the next generation.

As a community we all have a responsibility to align our investment behaviour with an approach that benefits all of society. Our recent experience with the pandemic has shown us just how connected as well as how vulnerable we all are to global trends while also illustrating how powerful the collective impact of global action can be.

Moving the Conversation Beyond Compliance

For many advisers, ESG can feel like a regulatory requirement rather than a client priority. However, when framed correctly, it becomes part of a broader discussion about long-term risk, resilience and sustainable returns.

ESG is not solely about values-based investing or excluding certain sectors. Increasingly, it is about identifying financially material risks and opportunities, from climate transition risk to governance failures - that can impact portfolio performance over time. Positioning ESG within the context of risk management and stewardship makes it a natural extension of holistic financial planning.

Practical Considerations for Advisers

To approach ESG with confidence:

• Ensure sustainability preferences are clearly captured during fact-finding.
• Understand how your chosen funds incorporate ESG considerations.
• Be prepared to explain the difference between exclusion strategies, ESG integration and impact investing.
• Revisit client preferences as regulation and awareness evolve.

Not every client will prioritise ESG in the same way, but creating space for the discussion strengthens trust and demonstrates attentiveness to changing expectations.

Looking Ahead

As wealth transfers to the next generation, sustainability considerations are likely to become more prominent. Incorporating ESG and sustainable finance thoughtfully supports both regulatory compliance and long-term client relevance.

Ultimately, framing ESG as part of prudent risk management and responsible stewardship allows advisers to stay focused on their core objective: delivering sustainable, long-term outcomes for clients while acknowledging the broader environment in which investments operate.

Conclusion:

ESG is no longer a niche concept or a simple compliance requirement - it is an evolving part of mainstream investment practice. By framing the conversation around client values, long-term risk and sustainable returns, advisers can move beyond box-ticking and position ESG as a practical tool for delivering better outcomes. When approached thoughtfully, it strengthens client relationships while supporting responsible, forward-looking investment decisions.