President Trump’s hostile attitude to ESG investing has actually made 20% of UK private investors more positive about it, while leaving 66% indifferent, according to the latest ESG Attitudes Tracker from the Association of Investment Companies (AIC). Only 8% of investors have become less favourable to ESG as a result of Trump’s approach.
In general, private investors are warming to investing that takes environmental, social and governance factors into account, according to the study conducted for the AIC by Research in Finance.
One respondent said: “Donald Trump’s an extreme example of someone who just is really, in my view, focused on money. And so much environmental legislation is being ignored. The environment’s being ignored. At the end of the day, America’s part of our planet, the UK is part of our planet. We need to do more for the environment.”
More than half of investors (53%) consider ESG factors when investing, reversing a steady decline since 2022. Last year, 48% of investors said they considered ESG factors.
Nearly half (49%) said that they are fans of investments that consider ESG factors, up from 43% last year.
And 55% said that they hold at least some sustainable investments, up from 52% last year.
These trends are being driven by investors aged under 45. For example, 75% of investors in this age group said they considered ESG when investing, up from 53% last year. The same proportion, 75%, hold at least some sustainable investments, while 76% are fans of investments that consider ESG. Those with children were also more likely to be favourable towards ESG2.
Nick Britton, Research Director of the Association of Investment Companies (AIC), said: “After getting steadily worse since 2022, sentiment around ESG investing has seen a modest improvement among private investors this year. It’s not a dramatic reversal but it is a definite shift, driven in particular by younger investors and parents.
“There’s evidence that the strength of the backlash against ESG in the US has actually made UK investors less likely to adopt a similarly hostile stance.
“That said, ESG investing is still less popular than it was in its heyday in 2021 when two-thirds of investors said they considered ESG factors – now it’s just over half. Poor performance of sustainable funds is the main culprit and greenwashing is still a concern.”
Scepticism remains, though FCA labels expected to help
Only 19% of investors believe ESG investing is likely to improve performance. One investor said: “I’ve always looked at it as not as advantageous profit-wise compared to other investments, because they only look at the market in certain sectors and get rid of sectors, for example oil and weapons, which can be a lot more profitable.”
More than two-thirds (71%) of investors said they prioritised performance over ESG issues. One respondent who had invested in environmentally focused funds commented: “I’ve lost money and I can cope with some losses, but some of them have been quite significant when other non-environmental funds have actually done pretty well.”
More than two-thirds of respondents (68%) said they were concerned about greenwashing, and 46% said they had seen actual examples of greenwashing, up from 36% last year. “It’s like trying to pull the wool over your eyes,” said one respondent. “Where they’re saying they’re doing stuff but it makes up a minimal percentage of what they do.”
Nevertheless, investors were hopeful that the sustainability labels launched by the Financial Conduct Authority (FCA) last year would help stamp out bogus ESG claims. A majority (54%) said the labels are likely to increase their trust in ESG claims, increasing to 70% among those who hold sustainable investments.
