While sustainability remains an important factor for investors, those willing to take more risk put less of an emphasis on sustainability, Dynamic Planner finds.
In its review of data, which contains over 17,500 investors, Dynamic Planner found that of those with a risk level of 10, over half said sustainability was of low importance to them.
Louis Williams, head of psychology and behavioural insights at Dynamic Planner, said: “We have found those investors who are more comfortable with increased financial risk are prepared to invest in market opportunities that go beyond the realms of companies that act in a sustainable or ESG risk managed way.
“This may be because climate change and risks of stranded assets have not yet been properly understood or their appetite for not missing out on certain market sector returns is still the overriding motivation. There also may well be some investors who want their fund managers to engage (by remaining invested) to bring about change.”
The study found no difference in the interest of younger versus older investors within the realm of ESG. However, it did find that men were less likely to view sustainability as medium-to-high importance than women, with 21% and 32% respectively.
Investors put the most emphasis on the governance portion of ESG. Over half of those who believed sustainability to be of only some importance thought that governance and the fair treatment of stakeholders was important. Emphasis on environmentally-friendly investing came second, and social issues, encompassed by the ‘S’, ranked last in importance.
“Our analysis paints a nuanced picture of attitudes towards investing sustainably and ESG factors,” Williams said.
“Events like COP28, which bring the world together to focus on issues such as climate action, have ensured that many people understand the importance of acting in a sustainable way. However, using the power of their investments to shape the world for the better is perhaps limited for some due to the greater focus on trying to achieve a better return.”