Over 70% of individual investors describe themselves as being interested in considering sustainability factors when making investment decisions, according to a new report.
The Morgan Stanley Institute for Sustainable Investing published the report – Sustainable Signals. The study included a survey of 800 individual investors and questioned them on their investment decision-making process, expectations for the future and barriers to investing sustainably.
Almost two-thirds of those polled believe that sustainable investing will become more prevalent over the next five years. The responses reflect a wider trend that has seen the global sustainable investment market grow. Separate research has shown that between 2013 and 2014 assets invested sustainably reached $21.4 trillion (£13.8tn), a 61% increase.
Audrey Choi, managing director and CEO of the Institute for Sustainable Investing at Morgan Stanley, commented, “The trajectory for sustainable investing continues to point upward. What used to be a bifurcated decision – one between investing to make money and giving to do good – is increasingly becoming a blended conversation as investors look to harness the power of the capital markets as a force for positive impact.”
Younger generations and women are more likely to be open to the idea of investing sustainably. Some 84% of millennials, described as being aged between 18 and 32, are interested in sustainable investing, compared to the two-thirds of baby boomers that indicated they were. Similarly, 76% of women showed an interest in reflecting their values in their investment portfolio, compared to 62% of men.
Despite the survey revealing that the majority of investors are interested in considering environmental, social and governance (ESG) factors, it also found a divide in the perception of sustainability and financial gains as being a trade-off, with 54% answering yes, compared to the 46% that said no.
Choi added, “The survey shows that the perception of trade-off between profitable and sustainable investment is still a major barrier to growth of the field – we and others trying to advance sustainable investing at scale have a job to do, demonstrating that it is possible to achieve positive impact and market-rate returns.
“Why does this matter? We believe that it is necessary to mobilise private capital at scale to address global challenges.”
The myth that sustainable investment means sacrificing returns remains a persistent one. However, research has suggested that investing responsibly can lead to higher returns in the long-term. Many of the respondents to the latest survey recognised this, with 72% stating companies with good ESG practices can achieve higher profitability and are better long-term investments.
Photo: Ken Tegardin