FundCalibre poll indicates a third of investors do not invest in ESG funds due to confusing terminology, a lack of choice and the perception that ESG investing is not mainstream
Next week is Good Money Week: seven days of raising awareness of sustainable, responsible and ethical finance. From banking to pensions, savings and investments the promoter’s aim is to help people make good money choices.
But despite increasing interest in this area, a recent survey by FundCalibre suggests the asset management industry still has some work to do to entice investors into ESG investing.
A poll of FundCalibre visitors this month revealed that 68% of investors have already put some money into funds that invest responsibly and 63% are either very likely or likely to do so in the future.
But what is holding the other third of investors back? Confusing terminology, a lack of choice and the perception that ESG investing is not yet mainstream enough, were among the top three answers.
Investor preferences
When it comes picking stocks for portfolios, only 8% of respondents said they would invest with a manager who only targets ‘good’ companies – 35% prefer fund managers to engage with companies and improve practices and 57% want managers to do both.
But interestingly, bad practices by a company would only put off 33% of investors – 5% would put up with some bad behaviour and 62% would decide depending on what the company had actually done.
And, while fund managers last year believed that the ‘S’ of ESG would be the focus of investors in 2021, social issues were in fact last on the list of priorities among respondents. Environmental issues, followed by good governance were more popular, while the most important individual issues cited were climate change, pollution, human rights, corruption and company ethics.
Commenting on the findings, Ryan Lightfoot-Aminoff, senior ESG research analyst at FundCalibre, said: “When it comes to our daily lives, many of us are already making good choices: recycling more, using cars less (or going electric), consuming less plastic, eating less meat… the list goes on.
“And there has certainly been an uptick in interest from investors in recent years. But there is clearly more work to be done by our industry to make ESG investing more accessible to investors and to articulate better what funds are available and what they are trying to do.”
