Worldwide investor demand for environmental, social and governance (ESG) investing is strong, according to a survey conducted by Natixis Investment Management, with 76% of individual investors globally and 71% of U.S. investors saying it is important to have the ability to invest according to personal values and ethical requirements.
The survey, which polled 12,375 individual investors, financial advisers and institutions around the world, found that 60% of investors globally and 48% in the U.S., say they actively seek out investment opportunities that align with their personal values. At the same time, 50% of investors around the world and 46% of U.S. investors say that they align their investments with their personal values as much as possible but not at the cost of lower investment returns.
On environmental issues, U.S. investors said they are concerned most about pollution (52%); waste and recycling (46%); and climate change (41%). On social issues, the top three concerns are human rights (59%); employee health and safety (51%); and labor practices (34%). On corporate governance, topping the list were bribery and corruption (57%), business ethics (42%) and transparency (42%).
Among institutional investors, 61% of those surveyed say they currently implement ESG strategies within their portfolios. In addition, 56% believe there is alpha to be found in ESG, 55% plan to increase their ESG allocation in 2019, and 65% believe incorporating ESG will be a standard practice for all managers within five years. More than half — 56% — believe ESG strategies can mitigate risk.
Despite the large number of investors who think it is important to align their investments with their values, only 28% of U.S. financial advisers said their clients asked about sustainable investments in the past 12 months, and just 32% said that clients are asking for ESG more now than they were a year ago.
Only 17% of financial advisers in the US who responded to the survey said they feel a need to improve their ability to understand and explain ESG to their clients.