The imp
act of the global pandemic has sharpened investors’ focus on social issues while the emphasis on higher returns fell from a year ago, according to the Schroders Global Investor Study 2021.
The study which surveyed over 23,000 people from 33 locations globally, found that 57% are now placing greater importance on social issues, slightly higher than the 55%n focusing on the environment.
In the past, the environment eclipsed the S but working conditions and liveable wages came to the fore during the pandemic and the shift to remote working.
There was also a change of thinking with performance. Over the years, a major counter argument to sustainable investing has been the level of returns, but this seems to be less important today.
However, the study did show that over half (53%) of investors still believe that data/evidence demonstrating that investing sustainably delivers better returns would encourage them to increase their allocations.
A further 40% of investors said that regular reporting highlighting the impact their investments are having would motivate them to increase their sustainable investments and, just over a third (36%), would like to see some form of self-certification from the investment manager that their investments are sustainable.
Although social is capturing attention, climate change continues to be a top priority and all eyes will on COP26 in Glasgow in November.
The report notes that “74% of people hold national governments and regulators accountable for alleviating the effects of climate change; whilst 53% of people think investment managers and major shareholders are responsible, a seven-percentage point increase since 2020.”
The study also looked at the controversies that 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.
“Interestingly, compared with their European counterparts, people in Asia and the Americas were the most sensitive to financial scandals,” it said.
In addition, people in the Americas were more likely to divest as a result of climate change challenges compared with investors globally.
Andy Howard, global head of sustainable investments at Schroders, “These findings have laid bare the growing expectations now being placed on asset managers when it comes to addressing climate change.”
“As investors and 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 a sustainable focus does not have to compromise returns. Indeed, we see sustainable value creation as intrinsically linked to successfully navigating social and environmental challenges.”
©Markets Media Europe 2021
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