Professional advisory services can no longer view sustainability and climate impact as an optional extra when talking to clients. It’s now a necessity, says Sebastian Elwell, of Switchfoot Wealth.
The urgency of climate change demands a profound shift in the way we conduct ourselves as professional advisers. Factoring sustainability into professional practice is no longer merely a moral choice; it’s becoming an imperative of essential responsibility.
Legal professionals, financial advisors, accountants, actuaries, consultants and others have a major role to play in shaping a more sustainable future. We have the ear of those with significant power, influence and resources; all critical ingredients for change.
Unfortunately, a significant majority professional advisers have not yet fully integrated sustainability and climate-related risk factors into their service offerings. The Institute And Faculty Of Actuaries’ “Emperor’s New Climate Scenarios” and Net Zero Lawyers Alliance’s discussion paper on “Sustainable Fiduciary Duties” make this clear.
The result is that we base our advice on assumptions about the future that do not adequately factor in the climate emergency, both in the form of direct and transitional risks.
There are, of course, providers who offer advice and services aligned with sustainability goals. But overall, these are still seen as the ‘alternative’ choice rather than the default.
As a profession, I believe we need to make sustainability and climate-conscious advice the default option, not the alternative. We should make it the default option to inform clients regarding their impact and their own exposure to climate risk.
Climate advice and key professional duty
Our duty as professionals compels us to prioritise our clients’ best interests. This includes acknowledging the significant risks – including, importantly, physical and financial – posed by the climate emergency. Ignoring these risks could be seen as a breach of our professional obligations.
We must engage our clients in open and honest conversations about climate change and its implications for their future as individuals and businesses. While the topic may be complex, our role is to provide clear, actionable advice.
This may seem like an imposition, but in fact introducing sustainability into advisory conversations presents a significant opportunity. Many clients are increasingly concerned about climate change and are open to exploring sustainable options; according to the ONS, 64% of adults in the UK feel worried about climate change, and a Deloitte survey found that 62% of CxOs are too. By offering guidance and support to meet this demand, we can improve our client service and even become more competitive.
As professional bodies and regulators begin to (belatedly, I would suggest) embed greater requirements related to climate risks and sustainability within their remit, advisers who are behind the curve could quickly be ‘caught out’, behind the curve.
Navigating climate complexity with clients
So, how do we introduce the climate emergency and sustainability into client conversations? After all, clients will usually be coming to us with a certain understanding of our sphere of attention. How do we expand the conversation into this new realm?
Thankfully, this is a problem that professional advisers are well-equipped to resolve. After all, we are skilled at communicating often complex information in a manner that is relatable for clients, and straightforward for them to take decisions on.
First, it’s imperative that we inform ourselves (through CPD training, perhaps, or by conducting our own research and explorations) to best inform our clients. Collectively, we have millions of client conversations every year, so there is a sizable opportunity for positive impact, just by equipping ourselves with insight to share.
We need to find a way to help clients navigate the far more likely future scenarios of climate impact. After all, when we present long- and even medium-term plans that ignore the overwhelming evidence of likely climate impact – both to our world and the economy – are we really presenting a fair and reasonable assumption?
Advocacy for systemic change
We can all play our part individually, but making sustainable professional practice the default will require systemic change within the professional community and our network of bodies and regulators. We must also advocate for policies and initiatives that promote sustainable advisory practices, as well as seek regulatory change where required.
This is no easy task. There are significant and powerful vested interests in maintaining the status quo. Any change is hard, but in professional practice – where the status quo is often well-entrenched – this is likely to be a particularly challenging endeavour.
One way to create change is to lead by example. By integrating sustainability into our own practices, we can demonstrate our commitment to this cause and inspire others to follow suit. If you’re a professional who believes things should be done differently – I urge you to explore ways to do so and to implement what you learn.
Making sustainable professional practice the default
Addressing sustainability and climate impact within professional advisory services is no longer an option; it is a necessity. By embracing a new approach, we can help our clients to navigate the challenges of a changing world and build a more sustainable future for generations to come.
This is a mission we can all feel proud to be a part of.
Sebastian is a fellow of the Personal Finance Society (PFS), a Full Member of the Society of Trustee and Estate Practitioners (STEP) and an accredited member of The Society of Later Life Advisers (SOLLA). His firm, Switchfoot Wealth, is a registered B Corporation.
