Global Sustainable Investing Is On The Rise
A recent survey of 22,000 investors across 30 countries by global investment manager Schroders has found that sustainable investing is on the rise across the globe, further finding that investors see sustainable investments as a way not only to drive societal, social, and environmental change, but also as a means to earn a profit.
Schroders’ survey of more than 22,000 investors across 30 countries found that 78% of respondents now consider sustainable investment of more importance than only five years ago, with 32% saying it was “significantly” more important. Breaking that down a little further, Millennials are leading the way in terms of considering sustainable investing of more importance, with 86% of responding Millennials, while 79% of Gen Xers considered it of importance, and 67% of Baby Boomers. This confirms a separate report from earlier this year published by Morgan Stanley which similarly found 86% of Millennial investors are interested in sustainable investing.
Investors are also wanting to know more about sustainable investing, ranking as one of the most important topics investors wanted to know more about — highlighting a growing need for companies to take more seriously their sustainable investment priorities.
The survey also found that investors are increasing the share of money they allocate to sustainable investments, with 64% of investors saying they have increased their sustainable investments over the past five years. Further, this particular trend seems to be strongest in Asia and the Americas, over Europe.
|
Investors that said sustainable investing is more important than five years ago |
Investors that stated they have increased their investment over the last five years |
|
|
Global |
78% |
64% |
|
Europe |
75% |
58% |
|
Asia |
80% |
68% |
|
Americas |
81% |
70% |
“It is extremely encouraging for us to see sustainable investing is on the rise,” said Jessica Ground, Global Head of Stewardship at Schroders. “While profitability remains the central investment consideration, interest in sustainability is increasing — and is especially strong in some surprising areas. But investors also see sustainability and profits as intertwined. They are looking to allocate to companies that are successfully navigating social and environmental change to generate profit and impact.”
It is important to see that investors are not necessarily increasing their sustainable investments out of the goodness of their own hearts — though we also should not discount this trend. Sustainable investment has long since grown beyond being a way to drive societal, social, and environmental change, and has now grown into a legitimate way to generate significant profits.
When respondents were asked whether they invested in sustainable funds for the positive impact it has or for the potential profit, 38% said they did it for the positive impact, but this was closely followed at 32% by those wanting to generate profit. This was spread pretty much across all types of investment funds, but two fund types reversed the trend:
- Investors said that investing in funds focusing on corporate governance was more likely to be for profit than for positive impact (37% vs 30%)
- Investing in medical science and biotechnology funds showed equal weighting between positive impact and profitability (36% vs 36%)
Meanwhile, the following funds were scored higher for their positive impact:
- Positive social impact funds such as human rights, poverty and social welfare 46% vs 25% (positive social impact vs profitability)
- Funds that invest in green technologies 43% vs 31% (positive social impact vs profitability)
- Funds that avoid oil, gas or coal companies 37% vs 31% (positive social impact vs profitability)
- Funds focused on improving diversity 34% vs 32% (positive social impact vs profitability)
Investors understand the impact that issues such as strong corporate governance and diversity can have in generating profits — views that are backed up by the research.
“Social and environmental change is happening faster than ever,” Jessica Ground continued. “The challenges posed by climate change, inequality and demographics are sizeable. 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.”
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