Globally, investors see sustainable investing as a way to drive not only societal, social and environmental change, but also profit.
Schroders surveyed 22,000 investors across 30 countries and found that sustainable investing was the top investment topic of which most people would like to improve their knowledge.
Investors are also putting their money where their mouths are and allocating increasing sums to sustainable investments.
However, this trend appears to be stronger in Asia and the Americas than in Europe, as demonstrated in the table below:
Impact or profit
When asked if they invested in sustainable funds for positive impact or potential profit, the average response across all fund types showed that positive impact had a greater importance (38%) than profit (32%).
The two fund types that bucked the global trend, with profit scoring higher or the same as positive impact were:
- Funds focusing on corporate governance was more likely to be for profit than for positive impact (37% vs 30%); and,
- Investing in medical science and biotechnology funds showed equal weighting between positive impact and profitability (36% vs 36%).
In contrast, investors scored the following funds higher on the positive impact:
- Positive social impact funds such as human rights, poverty and social welfare (46% positive social impact vs 25% profitability);
- Funds that invest in green technologies (43% positive social impact vs 31/5 profitability);
- Funds that avoid oil, gas or coal companies (37% positive social impact vs 31% profitability);
- Funds focused on improving diversity (34% positive social impact vs 32% profitability).
Strong interest in surprising areas
Jessica Ground, Global Head of Stewardship at Schroders, said: “It is extremely encouraging for us to see sustainable investing is on the rise.
“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.
“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. 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.“
Geographical differences
The adoption of sustainable behaviours, such as recycling, and reducing energy, and popularity of sustainable investing differs between countries.
Schroders has created a sustainability ranking based on an average score of the questions it posed to investors. Indonesia topped the ranking, with India second and the US third. At the bottom of the list were Hong Kong, South Korea and Japan.
