As sustainability becomes an increasingly prominent consideration in investment decision-making, financial advisers are faced with a dual responsibility: supporting client values while staying compliant with regulatory expectations.
Under the Consumer Duty, which places a heightened emphasis on delivering good client outcomes, advisers must ensure that any sustainability discussions are both meaningful and well-documented.
Yet the question we often hear remains deceptively simple: “How do I talk to clients about their sustainability preferences — and how do I evidence those conversations?”
The good news is, this doesn’t need to be complicated. At ESG Accord, we’ve developed a free-to-access practical, two-step framework designed to embed informed choice and transparency into the investment advice process.
Every preference is valid. What matters is capturing their wishes accurately and clearly
It helps advisers confidently engage with clients, meet regulatory standards and deliver advice aligned with individual values — all without overengineering the client experience.
Step 1: Informing clients before the meeting
The first principle of good advice is informed choice. When it comes to sustainability, this starts before the client even enters the meeting room.
Rather than springing sustainability questions on clients mid-conversation — a moment when they may feel unprepared or pressured — we recommend sharing a concise overview of the investment spectrum ahead of time.
This pre-meeting resource allows clients to reflect on their values and priorities, setting the stage for a more productive and client-led discussion.
Importantly, this approach supports the requirements of the Consumer Duty. When clients have time to consider their preferences before a formal advice interaction, they are more likely to make informed decisions.
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Moreover, emailing the document in advance creates a clear record of disclosure — what was sent, when and to whom. From a compliance and audit perspective, this is invaluable.
Tip: Never hand over the document in the meeting — that risks feeling like a sales tactic, and it can easily veer into ‘sludging’ territory (more on that later). Advance sharing via email is not only more transparent, but it provides demonstrable evidence of fair treatment.
Step 2: Confirming and recording preferences
Once in the meeting, start by confirming the client has received and reviewed the document. Encourage questions. This shows you’re not just ticking a box — you’re inviting engagement and ensuring the client is comfortable before any decisions are made.
Clients may express interest in full sustainable alignment, partial alignment, or none at all. Every preference is valid. What matters is capturing their wishes accurately and clearly, and ensuring those preferences are reflected in your recommendation and portfolio design.
To do this, use a standardised document, which can act as a bridge between client intention and adviser recommendation, covering:
- What the client wants, and how much if any in sustainable/ethical options.
- Your corresponding recommendation, including percentage allocations.
- Any differences between client request and adviser advice, with a documented rationale.
The client signs this record, making it an official part of your KYC and suitability documentation. It’s a simple but effective way to ensure the conversation is retained in a format that aligns with regulatory expectations.
Navigating partial alignment
A common misconception is that clients must commit fully to sustainable investing in order for their preferences to be acknowledged. That’s not the case.
Clients can take a blended approach: applying sustainable preferences to some products (e.g., Isas or GIAs) while maintaining a conventional stance in others (e.g., Sipps or bonds). What’s important is that this is agreed upon clearly and documented with precision.
Beware the compliance risk of ‘sludging’
There is a fine line between due diligence and administrative overload. Forcing every client to complete a comprehensive values questionnaire, regardless of their interest, can lead to confusion, frustration and ultimately poor outcomes.
We’ve seen cases where clients were overwhelmed by the depth of paperwork, opted out of sustainability altogether, and advisers left little indication in the file as to whether clients had a fair chance to understand their options.
Good advice under the Consumer Duty is about ensuring decisions are made freely, with clarity and full understanding
If a client wants to engage deeply, a robust questionnaire is an excellent tool. But for those simply looking to align a portion of their money with their values without a deep dive, keep it light and accessible. That’s not cutting corners. It’s respecting preferences and upholding the regulatory principles of fairness, choice and accessibility.
The bottom line: Treat every client fairly
Whether a client wants zero exposure to sustainable investments or 100% exposure to net-zero options, or something in between, the adviser’s role is to listen, inform and record.
Ultimately, good advice under the Consumer Duty isn’t about pushing clients in a certain direction; it’s about ensuring their decisions are made freely, with clarity and full understanding. The file should demonstrate that:
- Clients were given clear information.
- Discussions were documented.
- Preferences were respected.
- Outcomes were aligned with client preferences.
With the right tools and approach, advisers can navigate the sustainability conversation confidently, supporting both their clients’ values and their regulatory obligations.
Lee Coates OBE is a director of ESG Accord
