Investors prioritise solutions to environmental and social challenges above profit, according to a recent survey* by global investment manager Schroders.
When asked whether sustainability was a more important factor now than it was five years ago when considering potential investments, some 78% of the 22,100 investors in 30 countries questioned said it is, with as many as 81% in the Americas and 80% in Asia.
The survey found that sustainable investment was the sector investors would like to learn more about, ranking higher than such subjects as asset classes and the effects of compounding.
This increasing interest in the sustainable investment sector has also been reflected by a change in investor behaviour, with 64% of investors saying they have increased their holdings in sustainable investments over the past five years. This percentage is again higher in the Americas (70%) and Asia (68%).
Each of the countries surveyed was ranked according to sustainable behaviour (e.g. adoption of recycling and energy efficiency measures) and investment. Top of the table was Indonesia, with India second, the USA third, China fourth and Brazil fifth. Propping up the rankings were Hong Kong, South Korea and Japan.
Investors indicated that the positive impact of an investment on social and environmental challenges was more important to them than potential profit, especially amongst those who invest in green technologies, where 43% chose such funds mainly for their positive social impact as opposed to 31% for profitability.
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."
*Schroders commissioned Research Plus Ltd to conduct, between 1st and 30th June 2017, an independent online study of 22,100 investors in 30 countries around the world, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines ‘investors’ as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years.