NEW YORK–(BUSINESS WIRE)–Schroders, a global asset manager, today released the findings of its annual Global Investor Study which found that many U.S. investors believe investing sustainably can help ensure long term profitability, and that they seek out opportunities to tailor their sustainable investing options to match their personal beliefs.
Schroders’ Global Investor Study surveyed over 23,000 investors (including 1,500 in the U.S.) to gauge their sentiment on key investment themes and outlooks, with a particular focus on their views on sustainability, climate change and ESG (environmental, social, governance) investing.
Sustainable investing can drive long term profitability and positive change
Despite the divide emerging among certain U.S. states regarding ESG, this year’s survey found that 58% of U.S. investors (including 65% of U.S. millennials, ages 22 – 41) believe investing sustainably is the only way to ensure profitability for the long term. This may be due, in part, to concerns over the impacts of climate change on investments – when asked if they worry about this, 55% investors strongly agree or agree with this concern.
In addition to potentially driving stronger investment performance and mitigating risks, 62% of American respondents believe that sustainable investment can also lead to progress on challenges such as climate change. This is especially true among Millennials at 68%, compared to 55% of Baby Boomers (ages 55 to 74).
For example, U.S. investors are emphasizing the importance of investor engagement on climate issues. Fifty nine percent of investors listed general climate efforts (including Net Zero, decarbonization and physical risks) as one of the top three most important areas investors should engage with companies on. Natural capital, which includes efforts to mitigate deforestation and pollution, was also a priority issue at 59%.
Customization within portfolios is preferred, particularly around social issues
While general interest in sustainable investing is high, U.S. respondents are not interested in a one-size-fits-all approach and want to see options for personalization within their investment portfolios at higher rates than their global peers. In fact, 61% of U.S respondents (compared to 57% globally) indicated the ability to choose investments aligned to their personal sustainability preferences is something that would encourage them to increase their sustainable investing.
When it comes to sustainable investing priorities, U.S. investors closely align with the “S” in ESG. Nearly 7 in 10 American respondents (69%) identified human capital management (e.g., health and safety, wellbeing, compensation & benefits) as one of the top three most important areas on which investors should be engaging with companies. Forty six percent of investors ranked diversity and inclusion as a top choice, while 42% ranked human rights.
When asked on which areas they would most like their investments to have an impact, U.S. investors selected several “S” focused initiatives among their top choices, including:
- Quality education (47%)
- Good health and wellbeing (47%)
- Clean water and sanitation (38%)
- Zero hunger (35%)
- No poverty (34%)
Fifty percent of surveyed Americans indicated that sustainable funds were attractive because of their personal societal principles, compared to 43% of global investors.
Calls for data clarity continue
Education around sustainability is important, but currently, the type of available information is overwhelming to the majority (55%) of investors. Despite 70% of respondents noting they have access to education about sustainable investment in general, over half noted the lack of transparency and reported data from providers around the impact of sustainable investments (55%) and the lack of clear, agreed definitions on what sustainable investment is (54%) as barriers to increasing their level of sustainable investments. This demonstrates that while there is plenty of information on sustainability available, investors still lack clear, comprehensible and accessible resources that explain ESG investing more generally, as well as within their portfolios.
This may make investors less inclined to seek out and engage with sustainability-related information. For example, while 7 in 10 investors have access to information around sustainability in general, only 43% engage with the information. Additionally, 66% of investors say they have access to data/evidence that shows investing sustainably delivers better returns but only 38% engage with the information.
A more standardized approach to education about sustainable investments in general may help curb this, with 54% of US respondents noting education would encourage them to increase their sustainable investments.
Marina Severinovsky, Head of Sustainability, North America, commented:
“Despite the divide emerging in the U.S., this data clearly suggests investors are coming to believe that investing sustainably is a long-term endeavor. Moving forward, it will be crucial to examine the decades-long trends around both environment and society, and how to align investment options alongside them, in order to tap into the opportunities that come along with change.
In addition, as asset managers look ahead, we need to evaluate our product positioning and seek to provide greater clarity on different investment options and to provide investors with the real-world context of the information shared. It’s time managers cut through the jargon and clearly position the impacts of challenges, like climate change, which are increasingly becoming real costs.”
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Founded in 1804, Schroders is one of Europe’s largest independent investment management firms by assets under management. As of 30 June 2022, assets under management were £773.4 billion (€898.4 billion; $939.2 billion). The founding family remain a core shareholder, holding approximately 48% of the firm’s voting shares. Schroders has continued to deliver strong financial results. It has a market capitalization of circa £7.7 billion and employs over 5,800 people across 38 locations.
Schroders has benefited from the most diverse business model of any UK asset manager by geography, by asset class and by client type. Schroders offers innovative products and solutions across their five business areas of solutions; institutional; mutual funds; private assets & alternatives; and wealth management. Clients include insurance companies, pension schemes, sovereign wealth funds, endowments and foundations. They also manage assets for end clients as part of their relationships with distributors, financial advisers and online platforms. Schroders’ Wealth Management offering reflects their strategic ambition to provide wealth management and financial planning services to clients across the wealth spectrum.
Schroders’ strategic aims are to grow their asset management business, build closer relationships with end clients and expand their private assets and alternatives business. Schroders’ purpose is to provide excellent investment performance to clients through active management. The business channels capital into sustainable and durable businesses to accelerate positive change in the world. Schroders’ business philosophy is based on the belief that if we deliver for clients, we deliver for Shareholders and other stakeholders.
Important Information: All investments involve risk, including the loss of principal. The views and opinions contained herein are those of Schroder Investment Management North America Inc.’s (SIMNA Inc.). Quoted opinions shared may not necessarily reflect the views of SIMNA. These views and opinions are subject to change. These views and opinions are subject to change. This communication is intended to be for information purposes only and it is not intended as promotional material in any respect. SIMNA Inc. is registered as an investment adviser with the US Securities and Exchange Commission and as a Portfolio Manager with the securities regulatory authorities in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan. It provides asset management products and services to clients in the United States and Canada. Schroder Fund Advisors LLC (SFA) markets certain investment vehicles for which SIMNA Inc. is an investment adviser. SFA is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker dealer with the Financial Industry Regulatory Authority and as an Exempt Market Dealer with the securities regulatory authorities in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan. SIMNA Inc. and SFA are indirect, wholly-owned subsidiaries of Schroders plc, a UK public company with shares listed on the London Stock Exchange. Further information about Schroders can be found at www.schroders.com/us or www.schroders.com/ca. Schroder Investment Management North America Inc., 7 Bryant Park, New York, NY, 10018-3706, (212) 641-3800.
Sarah Levine, Prosek Partners
Jennifer Manser, Schroders