Will investors go 100% sustainable? Who should tackle climate change? Schroders’ Global Investor Study spans these questions and more.
The Covid pandemic has intensified concerns about environmental and social issues among individuals around the world who invest.
That is one of the key findings from Schroders’ 2021 Global Investor Study. Another is that increasingly asset managers are expected to take responsibility for action over climate change.
Here, we take a glance at the sustainability sentiments from the landmark annual survey, which analyses answers from more than 23,000 savers globally.
When it comes to the environment, respondents in Asia are most likely to say this has become more important, followed by those in the Americas and in Europe. This regional pattern also applies to the question of social issues.
The bulk of investors globally are at ease with the prospect of embracing sustainability, with 57% stating they would be happy to move to an entirely sustainable portfolio – so long as the same level of risk and diversification is maintained.
This sentiment was held across different age groups, with 18-37 year-olds, 38-50 year-olds and 51-70 year-olds (60%, 59% and 53% respectively) more enthusiastic than those over 71 (44%).
More than half (53%) of investors believe that data or evidence demonstrating that investing sustainably delivers better returns would encourage them to increase their allocations.
A further 40% of investors say that regular reporting highlighting the impact their investments are having would motivate them to invest sustainably. Just over a third (36%) would like to see some form of self-certification from the investment manager that their investments are sustainable.
Almost three quarters of savers (74%) agree that it is the responsibility of national governments and regulators, up from 70% in 2017.
More than two-thirds (68%) believe companies are responsible, up from 63% four years ago.
However, the biggest change in expectations since 2017 concerns the role of the investment industry. More than half (53%) believe investment managers and major shareholders bear responsibility, compared to 46% in 2017.
The feeling that individual consumers and savers needed to take responsibility has held fairly constant around the 60% mark.
Note: Respondents were able to choose multiple options, which is why figures do not add up to 100%.
The study also asked what controversies would drive people to withdraw from investments.
Financial scandals are the most likely, with these issues creating greater investment obstacles than cyber security hacks or climate change catastrophes. Nearly two-thirds (65%) of investors state they would sell out if their investments were impacted by financial or accounting scandals.
This was ahead of 61% of investors who cite cyber hacks and 60% who identify a climate change catastrophe as reasons for divestment. Interestingly, compared with their European counterparts, people in Asia and the Americas are the most sensitive to financial scandals (61% for Europe vs 68% for Asia and 69% for the Americas).
Savers in the Americas are more likely to divest as a result of a climate change catastrophe such as an oil spill compared with investors globally (63% vs 59% for Europe and Asia).
Andy Howard, Global Head of Sustainable Investments, says that the findings have laid bare the growing expectations being placed on asset managers when it comes to addressing climate change.
“We are focusing on ensuring the investments we manage for our clients are aligned to the transition toward a more sustainable planet, and benefit from the opportunities that transition will bring.
“As investors and as guardians of our clients’ assets, we seek to actively influence corporate behaviours so that the companies in which we invest are sustainable and resilient.
“At the same time, despite this greater profile for asset managers, there is still clearly more to be done to demonstrate to investors that it does not have to compromise returns. Indeed, we see sustainable value creation as intrinsically linked to successfully navigating building social and environmental challenges.
“As investment managers, we need to ensure we give our clients the information they need to assess our performance across the areas that matter to them. At Schroders we are taking these findings very seriously. As an active investment manager, we have a responsibility to show leadership on key sustainability issues and how we are meeting our clients’ evolving needs in this area.”
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