The global pandemic might have been a strong headwind for aspects of the drive for more "sustainable" growth - as in the push to use more renewable energy sources. But in fact the reverse has been the case, a global survey from the UK asset and wealth manager finds.
A survey by Schroders of more than 23,000 people around the world has found that the pandemic has sharpened most people’s interest in encouraging sustainability, with more than half – 55 per cent – saying environmental issues were more important than before COVID-19 erupted.
Most people feel positive about investing solely in a sustainable portfolio if it offers the same level of risk and diversification. Only 6 per cent of people have negative feelings, mainly due to concern over returns, the survey, conducted in 32 locations, showed.
There are notable differences by age and level of expertise. Overall 44 per cent of the 71+ group feel positive while, comparatively, 60 per cent of the 18 to 37 group felt positive. Likewise, beginner/rudimentary investors sat at 47 per cent, starkly different from “experts” of whom 67 per cent feel positive.
Financial scandals and environmental catastrophes are leading causes of divestment, the Schroders Global Investor Study 2021 report, said. Some 65 per cent of people say they would withdraw from a fund in the event of a notable financial or accounting scandal. The survey showed that 60 per cent of those polled said they would withdraw in the case of a climate change catastrophe that a company in their portfolio was responsible for.
Those interviewed were people who will invest at least €10,000 ($11,610) in the next 12 months.
The report’s authors said that the profile of sustainability in the wealth management universe has risen.
“In 2017, Schroders asked people to define 'sustainable investment fund.’ In recent years, evidence for the urgency of implementing sustainable practices has grown considerably. Sustainability's position in popular discourse has grown, so it was time to return to this question. In 2017, 53 per cent of people said they understood sustainable investment funds as 'funds that are profitable because they are proactive in preparing for environmental and social changes.’ The proportion of people selecting this definition increased to 59 per cent in the 2021 survey,” Schroders said.
“Last time we asked the question, 11 per cent of people had no idea what a 'sustainable investment fund' was. In 2021, this number came down to 6 per cent. Similarly, people aligning the term “sustainability” with a fund that avoids companies in controversial industries such as alcohol, tobacco or weapons manufacturing, decreased from 23 per cent in 2017 to 15 per cent in 2021,” it said.
The report noted regional variations – 68 per cent of investors in Asia chose the “funds that are best in class... even if they are not the most attractive investments," while for South Africa, the UAE and Australia (”other”) this figure is 60 per cent, 59 per cent in the Americas and 54 per cent in Europe. Asian investors are the most likely to believe that sustainable investment funds avoid companies in controversial industries, at 21 per cent.