During his first State of the Union address on January 27, President Barack Obama said, “The nation that leads the clean energy economy will be the nation that leads the global economy, and America must be that nation.” Although getting the legislation passed and implementing the programs to bring that about are likely to entail a protracted battle, there are signs that American investors are in agreement.
A recent survey of 1,000 U.S. investors conducted on behalf of Allianz Global Investors found that more than half of the respondents plan to invest in environmental technology, including clean energy, over the course of the next year. This marks the third consecutive year that the survey was conducted and it shows a 70% increase since 2007 in the number of investors who say they are capitalizing on environmental trends (17% in 2007 versus 29% in 2009). Other top-line findings: 73% think that enacting policies to promote “green” practices and technologies will have a positive impact on economic growth; and 57% believe that the recent push to create “green” jobs will help turn around the economy.
Participants in the poll, which was conducted online between December 28, 2009 and January 12, 2010, had to have primary or shared responsibility for investment decisions in households with financial assets of at least $100,000. The sample was weighted to match the characteristics of the total online population in terms of gender, age, household asset level, and region, using United States Census Bureau metrics.
When Allianz Global Investors conducted the survey in 2008, more than three-quarters of investors said that they expected the Obama Administration to do more to promote business investment in new environmental technologies in its first year than the previous Administration did in its eight years. A year later, 49% said that Obama has done as much as he should to promote environmental investment. They think even less of Congress, with only 34% of investors indicating that they think the current Congress has done as much as it could to promote investment in environmental technologies. Although there has been a notable increase in investor interest in environmental technologies, what’s up with the 71% of investors who are not capitalizing on environmental trends?
The Message for Advisors
The Allianz Global Investors survey also contained some good news for advisors, if they can get on the environmental investing bandwagon. More than two-thirds (69%) of all survey respondents indicated they felt the need to consult a financial advisor for help in investing with an environmental sensitivity. Among those with an advisor, more than three-fourths (76%) think that their advisor is at least somewhat knowledgeable about environmental investing, while half (50%) think it is important that their advisor bring them more environment-related investment opportunities. Unfortunately, 72% of those investors indicated that their financial advisor has never recommended an environmental investment.
Interestingly, of those respondents whose advisors have recommended such investments, only 11% of the advisors positioned the choice as the socially responsible thing to do. For 38% of advisors the reason was simply that it was a good investment, and for 44% it was a good investment that was also socially responsible.
In the opinion of Bozena Jankowska, head of the RCM Sustainability Research Team and lead portfolio manager of the Allianz RCM Global EcoTrends Fund, much of the resistance to environmentally oriented investing is because many people don’t understand the concept. “It means different things to different people,” she said during a telephone interview in mid-February from her office in London, “and I think that’s where the confusion lies.”