More than two-thirds (68%) of people who class themselves as knowledgeable about investment believe sustainable investment is the only way to ensure profitability in the long-term, according to Schroders’ ‘Global Investor Study 2022‘.
The study, which surveyed more than 23,000 respondents investing from 33 locations globally, revealed ‘expert’ investors were more likely to believe investing sustainably was core to driving long-term returns compared with those who rated themselves less knowledgeable. Just 52% of ‘intermediate’ investors agreed, and 43% of novice investors.
Focus on delivering financial returns remained the priority, with 56% seeking a fund that focused principally on delivering financial returns while integrating sustainability factors, though there was some disparity when it came to geography.
European investors were more likely to choose a fund with sustainable traits, with 51% of European investors seeking the aforementioned type of fund, compared to 61% in Asia and 60% in the Americas.
Interestingly, not all expert investors agreed investing sustainably could support positive change (69%).
Hannah Simons, head of sustainability strategy at Schroders, said that while beginner investors appeared more sceptical this year, the majority of those surveyed did stand behind the overarching premise:
“This is encouraging to see and further emphasises the crucial role asset managers have to play in terms of helping investors better understand how investing sustainably can not only help overcome challenges such as climate change but also support their long-term returns,” she said.
“Indeed, we see an intrinsic link between long-term sustainable investment returns and solving some of the world’s social and environmental challenges.”
The study found that environmental impact was the main attraction of sustainable investing, though investing according to social issues had grown in importance compared with prior years.
Investors said the ability to choose investments aligned with their personal preferences would encourage them to allocate more sustainably in future.
Just under half (48%) said more education around sustainable investing would encourage them to do the same.
A lack of clear definitions was cited as one of the most significant barriers. Andy Howard, global head of sustainable investment at Schroders, said:
“Financial education is a key element in driving more capital towards sustainable investing. It is clear from our research that what people seek is essentially guidance and clarity. The more people are able to understand the products they invest in and their impact on society and the environment, the more capital we should see flowing into sustainable investing.”
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