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Investors recognise climate responsibility but ambivalence to act remains

green investingResponsible investing is not important when making decisions about their portfolio, according to half of those questioned by Embark in its latest Investor Confidence Barometer research. 

The Confidence Barometer, a half-yearly survey of 1000 people, found that young investors in particular consider responsible investing as not important when making portfolio decisions, despite most believing it does not hinder returns.

Almost two thirds of advised and non-advised investors agreed it was their responsibility to invest in a way that doesn’t contribute to climate change. 

Just 19% of advised and 10% of non-advised investors, however, actively disagreed with this sentiment.

The viewpoint resonated most strongly with non-advised investors aged between 35-44, and non-advised female investors.

Half of both advised and unadvised investors agreed that responsible investing was not important to them when making decisions about their portfolio. There was a split between gender, with 54% of advised men stating that responsible investing was not important to them, compared to 46% of advised women. 

Among the younger generation, 61% of those aged 35-44 agreed that responsible investing was not important when making decisions about their portfolios, compared to 42% of 65–70-year-olds, and 40% of 55–64-year-olds.

Only 16% of investors believed responsible investing reduces returns. This is even lower for younger (35–44-year-old) non-advised investors at 8%. Meanwhile, more than half do not believe investing responsibly hinders returns, though older investors are more likely to be unsure, or suspect it does.

Sara Wilson, head of platform proposition at Embark, said: “Pretty much everything we read tells us millennials are prioritising responsible investing. In some ways, the findings of our latest Barometer reinforce this view. However, this does not appear to be influencing on-the-ground investment decisions.”

Wilson added the Barometer suggests that many of those with investable wealth don’t consider responsible investing as important enough to influence their investment choices. 

“With the UN Climate Change Conference kicking off in Glasgow shortly, this is a concerning insight,” she said.

The confidence in accurate ESG information in relation to portfolios was also identified as a “hurdle” for the industry to overcome. 

The survey revealed that nearly a quarter of advised investors are unsure if the information provided on ESG in relation to their portfolios is accurate. This number was even higher for non-advised investors (43%). As 70% of advisers are confident that the information is accurate, it suggests that this is an issue of education for investors.

However, it seems investors are unsure rather than believe information is incorrect, therefore there is an opportunity to change perceptions. Furthermore, with 61% of investors believing their financial adviser provides them with an adequate spectrum of ESG options, there is also an opportunity for advisers to do more with ESG for their investors.

© 2021 funds europe