Profit sustainably

How to win clients over with ESG

The whole world is talking about sustainability, and more and more people, companies and industries are acting on it. Everyone in the finance and insurance industry should therefore know what ESG means. ESG is a lot like the AI transformation: whether you welcome it or not, new rules create facts on the ground. That means more work at first, but also more sales potential.

A change of attitude can help with the transition. Adapting to the ESG requirements gives you the chance to set a strategic course and activate new client groups. On your way to becoming an expert, the following key questions can guide you.

1. What does ESG stand for?

ESG stands for environmental, social and governance. These are all areas in which companies can align their strategy with the sustainable use of resources.

Environmental: What does the ecological footprint look like? Are resources conserved and renewable energies preferred?

Social: What are the working conditions like? Do employees have equal opportunities when it comes to pay and promotion?

Governance: Are decision-making processes transparent? Is there effective risk management and a compliance structure?

The actual requirements go far beyond these examples. What should be clear is that sustainability is not only about protecting the environment. It is a holistic approach to safeguarding livelihoods.

2. What are sustainability risks?

Sustainability has an economic dimension as well as an ethical one. Neglecting ESG factors can jeopardise a company's success in the long run, for example through environmental violations or breaches of labour rights. These are known as sustainability risks.

If a company breaks compliance rules, for example, it faces reputational damage, fines or regulatory requirements. Reacting too late to new legal requirements can also lead to considerable disadvantages, from adjustment costs to exclusion from important markets.

Conversely, this means that meeting ESG criteria is an important part of a long-term risk strategy. In practice, sustainable companies often benefit from more stable business models. That can have a positive effect on the growth opportunities of funds that invest in such companies.

3. Which ESG requirements apply to intermediaries?

The extension of the Insurance Distribution Directive (IDD) that has applied since 2022 is the most relevant in practice. It requires you to ask about and document your clients' ESG preferences when you advise on fund-linked policies and other insurance-based investment products.

The EU Sustainable Finance Disclosure Regulation (SFDR) also matters for conversations with clients: it requires you to point out sustainability risks and, when you recommend a product, to show whether ESG characteristics are met. You also have to communicate transparently whether you are remunerated differently for ESG-compliant and conventional products.

4. How is sustainability classified?

Not everything is as green as it looks at first glance. Greenwashing is when companies give their (financial) products a sustainable image with misleading information or false promises, without actually meeting ESG criteria.

The SFDR creates more transparency in classification. It distinguishes financial products according to whether they ...

• do not meet ESG criteria (Article 6)
• take ESG characteristics into account when investing (Article 8)
• pursue an explicitly sustainable investment objective (Article 9)

To make this easier to see, the product groups are also colour-coded: grey (Article 6), light green (Article 8) and dark green (Article 9).

Rating agencies also make it easier for you to see how sustainable a fund or other financial product is. Well-known examples include the MSCI ESG Rating and the S&P Global ESG Scores. At Liechtenstein Life, you can filter funds by their SFDR classification (Article 6, 8 or 9) and by the Lipper ESG rating. It rates funds against their peer group on a scale of 0 to 100 and is shown in four levels.

5. Do sustainable funds deliver returns, too?

Should I invest ethically, or focus on returns after all? Many investors ask themselves this, aware that the planet has paid a high price for the rapid growth of recent decades. The good news for all environmentally conscious investors is that it need not be one or the other. Often, the two go hand in hand.

In 2020, Morningstar examined almost 4,900 funds launched in Europe, 745 of them sustainable. Over the ten years to the end of 2019, 58.8% of the sustainable funds still in existence performed better than the average of comparable conventional funds. In addition, sustainable funds were more likely than conventional ones to still exist after ten years.

The picture is similar for retirement provision: in March 2025, a study by the University of Liechtenstein in cooperation with The Prosperity Company concluded that fund portfolios with impact components, after filtering by total expense ratio, tended to perform better than their benchmarks made up solely of conventional investments (press release, in German).

6. How much does the topic matter to clients?

High returns, earned responsibly: that is what many people dream of, young people above all. According to the Next Gen Insurance 2025 survey, investors aged 16 to 25 care about two things in particular: transparency and sustainability. Asked "How important is it to you to use sustainable or ethical financial products?", a clear majority of 57.6% answered "important".

Another survey paints a more nuanced picture. In the study "Sustainable Investments 2025" by FNZ Bank (a representative survey of 1,020 people, published in May 2025), 47.9% of participants said they wanted to take sustainability aspects into account at least partly in future investments. For 52.1%, on the other hand, sustainability is not a decisive reason when choosing an investment.

7. How do I make the right case in a client conversation?

To introduce the other person to ESG, start by explaining the legal background and referring to the relevant EU requirements. Make it clear that conscientious implementation also protects the policyholder against regulatory risks.

You then have the opportunity to set out the concrete benefits, even to clients for whom sustainability is a rather abstract topic. It is quite possible that ESG-compliant investments benefit not only the planet but also the personal portfolio. ESG risks are reduced, which tends to improve the prospect of a high return.

Whatever the enthusiasm for ESG, do not forget that the fund selection has to match the client's risk profile.

8. How does all this pay off for intermediaries?

The questions and answers above should have made clear that ESG is more an opportunity than an obligation, and that applies to you, too.

This article only provides the foundation on which you should build. With the necessary knowledge and, above all, real conviction, a new perspective opens up. By positioning yourself as an ESG expert, you stand out from competitors who see sustainability as a tiresome duty. You gain not only expertise but also the trust of ESG-minded clients, a target group that will keep growing.

The value of your investment can fluctuate.

Article published by Prosperity Solutions AG