The Covid-19 pandemic has catapulted social issues to the forefront of investors minds, according to the latest global investor study published by Schroders today (September 30).
The survey of more than 23,000 people across Europe, Asia and the Americas, revealed that 57% of investors are now placing greater importance on social issues versus environmental issues (55%) compared to pre-pandemic levels. The definition of “people” in the context of the research means those who will invest at least €10,000 (or the equivalent) in the next 12 months or those who have changed their investments within the last 10 years.
Whilst the environmental element of ESG investing has been firmly on the radar of global investors since the Paris Agreement, meaningfully addressing social issues – from the consistency of corporate behaviour towards employees during the pandemic to working conditions and a liveable wage – has traditionally been lacking.
Over the years, a major counter argument to sustainable investing has been the level of returns, however, the focus on delivering higher returns has decreased compared to a year ago, according to the study.
The increasingly visible effects of the climate crisis and biodiversity loss have captured public attention and there is increasing pressure from the public to address these issues in order to operate within planetary boundaries. People now have a greater understanding of sustainable investments than ever before as evidenced in the results, with just 6% saying they have no idea what a sustainable investment fund is compared to 11% in 2017.
“The results of this study show quite clearly how much retail investors value the impact they can have, particularly on the environment, by investing in a sustainable fund,” Hannah Simons, head of sustainability strategy at Schroders told Funds Europe ahead of the launch of the investment firm’s 2021 Global Investor Study.
“This, more than returns, is what makes sustainable funds attractive. It is also the main reason why investors would be at ease with moving to a sustainable portfolio,” added Simons.
While the report findings bode well in terms of people’s awareness and understanding of sustainability, there is still more to be done with 53% of respondents saying that data and/or evidence demonstrating that sustainable investment delivers higher returns would encourage them to increase their allocations.
As the UK prepares to host COP26 in Glasgow in November, the climate crisis remains a top priority – particularly as the issue gathers urgency and momentum amongst the public. According to the report, “74% of people hold national governments and regulators accountable for alleviating the effects of climate change; whilst 53% of people think investment managers and major shareholders are responsible, a seven percentage point increase since 2020.”
“These findings have laid bare the growing expectations now being placed on asset managers when it comes to addressing climate change,” said Andy Howard, global head of sustainable investments at Schroders.
“As investors and guardians of our clients’ assets, we seek to actively influence corporate behaviours so that the companies in which we invest are sustainable and resilient. At the same time, despite this greater profile for asset managers, there is still clearly more to be done to demonstrate to investors that a sustainable focus does not have to compromise returns. Indeed, we see sustainable value creation as intrinsically linked to successfully navigating social and environmental challenges,” added Howard.
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