ESG Investing

Schroders Global Investor Study 2021 Reveals Impact Investors’ Attitudes and Motivations

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The past couple of years have had a dramatic impact on the global landscape amid the COVID-19 pandemic as well as ongoing natural disasters such as wildfires, flooding, and hurricanes.

As the harsh impacts of global climate change highlight the growing need for sustainability, the question is whether investors are taking notice. Global asset manager Schroders ran a study of more than 23,000 people around the world to see how recent events have influenced investment preferences. Their findings culminated in the Schroders Global Investor Study 2021.

Tracing Shifts in Preferences

Schroder’s survey results emphasize the pandemic’s clear impact on beliefs and investment preferences. The majority of participants’ interest in ESG factors had grown since the emergence of COVID-19: 55% of people said that environmental issues and sustainability are now more important to them than they were prior to the pandemic, and 57% now care more about social issues.

This aligns with the rising interest in sustainable investing overall—from 47% of investors surveyed in 2020 to 52% in 2021. Only 6% of respondents would feel negatively about investing through a sustainable fund, primarily due to concerns over returns.

People also displayed greater knowledge of sustainable investing. Just 6% said they had no idea what sustainable investing is in 2021, compared with 11% in 2017.

Larger trends see much more concern over climate change among younger generations—perhaps in part because that they are more likely to experience it.

Breaking Down Interest by Age

Younger investors stated a stronger preference for sustainable investing than older generations; sixty percent of respondents ages 18–37 and 59% of those 38–50 reported feeling positive about sustainable investing.

The drop-off increases with age, with 53% of those between 51 and 70 years old feeling positive about sustainable investing alongside just 44% of those over 70. Although this still represents still a considerable share, it reflects larger trends that see much more concern over climate change among younger generations—perhaps in part because that they are more likely to experience it. Meanwhile, older investors may be more focused on the now and maximizing returns.

Examining Other Important Takeaways

  • Investment Experience. Survey subjects’ viewpoints were heavily influenced by how long they had been investing. Self-reported expert and advanced investors responded the most positively and least negatively about sustainable investing, whereas beginner investors felt the least confident in the sector.
  • Location, location, location. Geography carried its own influence: in Thailand, 76% of people felt favorably toward this type of investing; in Sweden, only 36% felt the same way. The United States was one of the top nations, with 68% feeling positively about sustainable investing. Averaging by region, those in the Americas rated sustainable investing the highest, followed by Asia and Europe.
  • Focal points for expanding investment. When asked what would be a compelling reason to increase a portfolio’s slice of sustainable investing, respondents most commonly cited “data showing investing sustainably delivers better returns.” In second place was regular reporting in order to demonstrate investments’ positive impact on society and the environment.
  • Education. A critical element to driving further market growth and ESG investment is education—including showing how sustainable investing can have returns comparable with other strategies.

Gen Z and millennial investors will continue to mature into the majority, prompting a need to better understand the underlying momentum propelling their interest in ESG factors. Results alone cannot guide the course of a portfolio and drive smart investing; as the Schroders Global Investor Study 2021 reveals, breaking down investors’ motivations in the present can illuminate potential movements in the industry for the future.

Any company, security, fund or other investment identified herein is provided solely for illustrative purposes and should not be construed as a recommendation or solicitation for the purchase or sale of any such investment.

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