Over three quarters of investors would consider ESG investing, but uptake lags behind - Finder UK

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Over three quarters of investors would consider ESG investing, but uptake lags behind

  • 77% of current, and potential, investors are considering some form of ESG investment product
  • Only a third (34%) of current investors have deliberately invested in an ESG company or fund so far though
  • Half of current, and potential, investors would only consider ESG choices if they were likely to match or beat the performance of traditional choices
  • 31, March, 2021, LONDON –

    New research has found that 77% of current investors, and those planning to invest, are considering investing in stocks and shares, funds, ETFs or private pensions that are classed as environmental, social and corporate governance (ESG).

    If everyone followed through with their intention, this would result in almost 23.2 million* people holding ESG investments in the UK.

    However, there remains a sizable gap between these positive intentions and the number of people actually investing in ESGs.

    The new report, ESG: Is the investing landscape changing for good? from the personal finance comparison site, finder.com, reveals that only around a third of current investors (34%) have deliberately sought out an ESG investment so far.

    A further 23% of investors believe they hold one of these investments, despite not actively seeking an ESG product out. This brings the proportion of investors who believe they hold an ESG choice up to 57%.

    There have been calls for more clarity as to what makes a company or fund classifiable as ESG, and this appears to be an issue with investors – 1 in 5 (21%) don’t know whether any of their investments are in ESG options.

    More generally, half (49%) of the UK adult population say they currently hold shares, funds, ETFs or private pensions , with a further 8% planning to in the future.

    Reasons why people choose or avoid ESG
    The performance of ESG products is the main concern for those that are considering making any sort of future investment. Half (49%) of current, and potential, investors would only consider making ESG investments if they thought they were likely to perform as well as, or better than, other investment options.

    In contrast, just 28% of these investors would invest in ESG products even if they thought they were likely to get lower returns than other choices.

    A further fifth (22%) of potential investors aren’t considering ethical investments at all; this includes 8% who don’t believe ESG investments will perform as well as traditional options.

    Some are ruling out these investments purely because they find it too hard to understand which funds or companies are actually ethical (6%), don’t understand what ethical investing means (5%) or because they don’t trust that the investments in question are actually ethical (4%).

    Younger investors leading the green charge

    Gen Z (those born in 2010 and before) are the most likely to hold ESG investments, with 45% saying they have invested in ESG products and 22% saying they have deliberately sought out ESG products.

    In contrast, just 16% of baby boomers (those born 1946-1964) say they hold an ESG investment of some sort. Meanwhile, a higher proportion of the silent generation (those born 1945 and before) hold ESG products (22%), with just 3% deliberately invested in them.

    To see the research in full visit: https://www.finder.com/uk/stocks-and-shares-isas#esg-report

    Commenting on the findings, Zoe Stabler, investments writer at finder.com, said:
    “Many of us are ditching plastic straws, consciously recycling and paying even closer attention to David Attenborough, and an increasing number are also looking at how they can invest more ethically. Robo-advisors are taking notice of the changes and introducing new ethical portfolios which can help their users to choose, but there’s more to be done. We found that a sizable number of people who are choosing not to invest ethically put it down to a lack of trust or understanding in what makes an ethical choice. It’s especially difficult for those building their own portfolios – with no clarity on which companies are ethical choices, people are forced to do more research to find investments.

    “There needs to be a robust way of filtering out non-ethical choices, such as weapons manufacturers and fossil fuel companies and comparing potential investments against others in terms of environmental, social and governance (ESG) frameworks. A new EU Sustainable Finance Disclosure Regulation, which the UK is likely to adopt, could help to prevent greenwashing, which has been a concern among investors.”

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    * The 23.2 million figure has been calculated by projecting the percentage of people who are considering investing ethically against the latest ONS adult population estimate.

    Methodology:
    Finder commissioned Censuswide on 16 to 18 February 2021 to carry out a nationally representative survey of adults aged 18+. A total of 2,000 people were questioned throughout Great Britain, with representative quotas for gender, age and region

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    Disclaimer

    The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com's review pages for the current correct values.

    About finder.com

    finder.com is a personal finance website, which helps consumers compare products online so they can make better informed decisions. Consumers can visit the website to compare utilities, mortgages, credit cards, insurance products, shopping voucher codes, and so much more before choosing the option that best suits their needs.

    Best of all, finder.com is completely free to use. We’re not a bank or insurer, nor are we owned by one, and we are not a product issuer or a credit provider. We’re not affiliated with any one institution or outlet, so it’s genuine advice from a team of experts who care about helping you find better.

    finder.com launched in the UK in February 2017 and is privately owned and self-funded by two Australian entrepreneurs – Fred Schebesta and Frank Restuccia – who successfully grew finder.com.au to be Australia's most visited personal finance website (Source: Experian Hitwise).

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