Investors’ enthusiasm for ESG factors in their investment decisions has shown a marked decrease, according to the latest ESG Attitudes Tracker from the Association of Investment Companies.
According to Money Marketing, the study highlights a continuing trend where fewer investors prioritize ESG criteria, with only 48% considering it in their investment strategies, a significant decline from 66% in 2021.
The survey further reveals a shift in the ESG components that investors find most critical. Environmental issues, which previously dominated investor interest, now share equal importance with governance issues, both at 37%. In contrast, social factors lag behind, deemed important by only 28% of respondents. This change underscores a growing awareness and valuation of governance in sustainable investment practices.
Despite the decline in overall ESG enthusiasm, the research shows that younger investors under 45 are more likely to integrate ESG considerations into their portfolios, at 53%, compared to 43% of investors aged 65 and over. This demographic is also more inclined to view ESG investments positively, associating them with being responsible, a sentiment shared by 76% of the younger group versus just 48% of the older cohort.
Nick Britton, research director at AIC, commented on the findings: “Our ESG Attitudes Tracker shows that investors’ love affair with ESG investing continues to cool. That doesn’t mean they reject it altogether though. To extend the metaphor, they are thinking about the bits of ESG they like and those they don’t, and deciding if they want to make this a longer-term relationship.” He added, “One interesting aspect of this year’s research is that almost all the governance issues have increased in importance for investors. Investors are increasingly savvy and recognise that governance is the bedrock of ESG investing: put another way, you need the G before you can have the E and the S.”
The introduction of the Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR) aimed at combating greenwashing has not significantly altered skepticism among investors, but signs indicate stability in the distrust levels, hinting at potential gradual improvements in perception.
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