Awareness of ‘ESG’ investing is on the rise but appetite could be waning
Environmental, Social and Governance (ESG) investing is growing as businesses, investors, and world leaders recognise that we all need to do our bit to create a sustainable future for us all.
In our second annual survey, we reveal an encouraging picture of increasing awareness of ESG, with 55% of those people surveyed now having heard of ESG, an increase of 25% from 2020. This growth in awareness can only be a good thing given 71% of people who are already invested in ESG see it as an important part of their investment strategy, up from 56% in 2020. More than 4 in 10 (41%) now see ESG as Very Important to their investment strategy, a result that is up from 24% in 2020, meaning once you get on board with the concept it becomes a highly important part of your investment philosophy.
However, for those who haven’t already bought into the idea of ESG investing, there has been a small decrease in the desire to invest in the right way, with 78% of people interested in investing in responsible and sustainable companies and assets, down from 85% in 2020. Still, there is a large portion of investors who are eager to invest for good.
Still work to be done – especially with the grey market
With all the coverage of COP26 in Glasgow, and with continued huge marketing budgets being spent on increasing the awareness of the benefits of ESG investing, still nearly half of potential investors haven’t heard of the term, some 45%. And even of those who have heard of it, only 56% know what it stands for.
The most interesting, yet perhaps unsurprising, factor is age. It would appear the older the respondent is, the less interested they are in putting their money into responsible and sustainable investments. Once you get into the 55+ age groups, the appetite for ESG investments falls away sharply. We can all draw our own conclusions here.
Would you be interested in investments which put your money into responsible and sustainable companies and assets?
This growing awareness and passion for sustainability only goes to confirm our feeling that the future of investing really will be ESG. We can all do our bit to address climate change and using our hard-earned savings and pensions to make a difference can be something we can do today to help create a sustainable future for us and our loved ones.
The most encouraging sign is the growing exposure to ESG, with 50% of those who said they were interested in it now invested in ESG, up from just 35% in 2020, an increase of 43%. This sentiment is backed up by the Investment Association which claimed that two thirds of funds bought by ordinary investors in September 2021 were ‘responsible’. However, over half of those who do have exposure (65%) still have 50% or less of their portfolio in ESG. But, are investors armed with the right tools to make the right decisions about their money – including their personal and workplace pensions?
More work to be done
The industry must continue to play its part to ensure all investors are equipped with the right information and tools to make informed choices with their investments, pensions and savings. Passion is clearly there for investors, so we need to be able to facilitate the need and break down barriers and misconceptions about fees and performance. Once investors understand the concept of ESG many will see it as an important part of their decision making so it’s vital we support them all.
A common misconception is around the sacrifice of returns one must take when adapting ESG investment strategies. Our own ESG portfolios have performed positively over the last few years but there is more work to be done to quash the myth of low returns from ESG investments, pensions and savings.
To learn more about ESG and how you can blend it into your own investment strategy why not get in touch and speak to one of our experts.
The online survey was conducted between 20/10/21 to 22/10/21 using an online research company, Dynata. All respondents were aged 18-84 across all UK regions and respondents had to have at least £20,000 available to invest or save. The survey polled 508 UK adults. This is the second year of the survey run by TPO.
The content is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Most importantly, investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.