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North American individuals surpass Europeans at ESG adoption

ESG in the USANorth American individual investors lead Europeans at ESG investment, according to research from Natixis Investment Management that revealed 28% of North American investors held ESG investments compared to 22% of European investors. 

The survey of more than 8,550 individual investors across 24 countries revealed that within North America, US investors dominated, with 32% of US investors responding that they held ESG investments, compared to just 15% of Canadians. 

Today ESG assets are least prevalent in Latin America, but Natixis predicts this will change over time as the region is home to a large number of investors, 62% of which said they were interested in ESG.

A majority of investors around the world rejected the idea that companies are simply responsible for creating value for shareholders, according to the survey. Investors today expect accountability from companies for their impact on the environment and society, and they want to see more action from policymakers, the private sector, and fund managers.

Meanwhile 77% of respondents felt they had responsibility to hold companies to account for their impact on society, including on climate change and inequality, and 82% said companies had a responsibility to address social issues, whereas 78% felt this was governments’ responsibility.  

“Increasingly, individual investors believe the ESG investment decision-making process should involve all of the parties in investing, including financial advisors, fund managers and investors themselves,” said Dave Goodsell, executive director at Natixis IM Center for Investor Insight. 

“This is another example of how mainstream ESG has become in investing, and its potential for becoming among the most critical decision points for investments,” he added. 

Total net assets worldwide in ESG investment strategies hit $1.6 trillion in 2020, according to Natixis, and momentum is showing little sign of slowing down. 

Nearly half, or 49%, of those not yet invested in ESG indicated they were interested in learning more about it. 

“As ESG becomes more widely adopted and investors learn more about the different kinds of ESG investments, interest in ESG investing is growing rapidly, reinforced by positive returns from these strategies,” said Nathalie Wallace, global head of sustainable investing at Natixis Investment Managers. 

“With governments, nongovernmental organisations and private companies all showing increased commitment to ESG goals, these strategies can enable investors to pursue superior environmental and social outcomes and the financial performance they expect,” she added. 

The survey also revealed that while ESG investors do skew younger, broad adoption and interest suggests ESG now appeals to mainstream investors. As many as 27% of millennials said they were invested in ESG, but so did 20% of those in generation X and 18% of baby boomers. 

Unsurprising, 41% of ESG investors view such investments as a means to support the environment. 

However, investors are pragmatic, and just as many investors, up to 37%, said ESG opened up new investment opportunities for them. 

Only one in five investors were still clinging to the notion that investing in ESG means sacrificing investment performance, which is fitting as by the end of Q3 2021, the S&P 500 ESG Index had outperformed the S&P 500 Index by 3.7% for the three years ending October 3, 2021. 

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