Over half of financial advisers (52%) would consider ESG criteria only at the client’s request when building retirement portfolios, according to research from Aegon and Next Wealth.

Demand for ESG in retirement portfolios is low although the findings suggested that advisers are still taking action, with a third (31%) saying ESG is among the factors considered when selecting funds.

A further 3% said they apply a strict ESG screening process to all funds selected for retirement clients.

The research for Aegon and Next Wealth’s report, titled Managing Lifetime Wealth: retirement planning in the UK, surveyed 212 financial advisers in December 2020.

Aegon managing director for investment solutions, Tim Orton, said there has been a “sea-change” in responsible investing with individuals increasingly looking for answers on how their investments are contributing to “real-world change”.

“This has been furthered by increased regulation and momentum from the government pushing forward it’s green agenda for investments,” Orton said.

“The research shows advisers are taking this seriously and considering ESG factors when building portfolios, even if demand amongst retirement clients hasn’t yet caught up with the wider investment community.”

However, Orton also warned that a lack of industry standardisation means advisers face challenges when dealing with the different ethical considerations of their clients.

He added: “Firms have developed their own approaches, but as the industry shifts towards greater ESG adoption, more work is needed to support advisers to better compare ESG funds and explain strategies when building portfolios.”

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