Global Investors Flock to ESG

Sustainable investing is rising across the globe, as investors see it as a way to drive both profit and societal, social and environmental change.

In a new survey of 22,000 investors across 30 countries, 32% of respondents said sustainable investing was significantly more important and 46% said it was somewhat more important to them than it was five years ago.

Indeed, the survey conducted by Schroders, an investment manager, showed that sustainable investing was the investment topic survey respondents most wanted to find out more about, ahead of such things as asset classes and the effect of compounding.

Sixty-four percent of investors surveyed said they had increased their investment in sustainable funds over the last five years, including 70% of respondents in the Americas.

A recent study of global family offices found that 40% of these offices expected to increase their allocations to impact and ESG investments over the coming year. Another report found that three-quarters of the world’s 500 biggest money managers said their clients were increasingly interested in responsible investing strategies.

The Schroders survey indicated that investors saw sustainable investing as a way not only to drive societal, social and environmental change, but also to generate profits.

Asked whether they invested in sustainable funds for the positive impact or potential profit, 38% said positive impact, while 32% said profit.

However, profit scored higher or the same as positive impact in two instances.

Thirty-seven percent said investing in funds focused on corporate governance was for profit, while 30% said for it was for positive impact. Investing in medical science and biotechnology funds showed equal weighting of 36% between positive impact and profitability.

Investors scored the following fund strategies higher on positive impact:

• Positive social impact funds, such as human rights and poverty: 46% vs 25%
• Funds that invest in green technologies: 43% vs 31%
• Funds that avoid oil, gas or coal companies: 37% vs 31%
• Funds focused on improving diversity: 34% vs 32%

“While profitability remains the central investment consideration, interest in sustainability is increasing,” Jessica Ground, global head of stewardship at Schroders, said in a statement.

“They are looking to allocate to companies that are successfully navigating social and environmental change to generate profit and impact.

Ground said investors understood the effect that strong corporate governance and diversity, for instance, can have in generating profits, views supported by research.

“Social and environmental change is happening faster than ever,” she said. “The challenges posed by climate change, inequality and demographics are sizable. Our study shows that investors are willing to play a role and value the impact that investments in green technology and social impact can have.”

Adoption of Sustainable Behaviors

The Schroders research found that sustainable behaviors, such as reducing energy use and recycling, and the popularity of sustainable investing differed among countries.

As part of its study, Schroders created a sustainability ranking of the 30 countries in the survey, based on their average score of the questions its researchers posed to investors on their investments and behavior:

1. Indonesia

2. India

3. U.S.

4. China

5. Brazil

6. Thailand