How much does ESG really matter to investors?

SUE WHITBREAD
NOVEMBER 9, 2021
(IFA Magazine)

 

Environmental, Social and Governance (ESG), does it really matter to investors?

– Performance, charges, fund manager, asset management company all come first

– Research sheds light on why some investors don’t consider ESG at all

– Opinions split on ESG’s impact on performance and risk, but investors suspect it will mean higher charges

Although nearly two-thirds of private investors (65%) say they consider ESG, most prioritise other factors when choosing an investment, according to research from the Association of Investment Companies (AIC).1

When asked what was important to them in choosing an investment, respondents ranked ESG as the least important of five factors. This was true for men, women, investors under 45, and those aged 45 and over. Among all respondents, the most important consideration was an investment’s performance record, followed by fees and charges, the fund manager’s reputation, and the asset management company’s reputation (see table below).

One female respondent aged 59 said:

“In my personal life I do give consideration to these things, I drive an electric car, I have a plant-based diet, I definitely have quite strong feelings about that – but hand on heart when it has come to my investments, the first thing I would look at is returns.”

 

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