Asia and US lead the way as global sustainable investing rises

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Asia and US lead the way as global sustainable investing rises

A survey of more than 22,000 investors across 30 countries has found that sustainable investing is on the rise across the globe with the US and Asia leading the way and the UK and Europe dropping down the rankings.

The survey, conducted by investment giant Schroders, highlighted that some countries such as Indonesia, India and the US are ahead of the curve with their sustainability behaviours, such as recycling, reducing energy. And popularity of sustainable investing differs also between countries.

Globally, investors see sustainable investing as a way to drive not only societal, social and environmental change, but also profit, Schroders said.

Using its research, Schroders has created a sustainability ranking based on an average score of the questions that it posed to investors.  Indonesia topped the ranking, with India second and the US third. At the bottom of the list were Hong Kong, South Korea and Japan.

The full ranking is below:

Ranking Country Ranking Country
1 Indonesia 16 France
2 India 17 Taiwan
3 USA 18 Switzerland
4 China 19 Austria
5 Brazil 20 Canada
6 Thailand 21 Singapore
7 South Africa 22 Italy
8 UAE 23 Germany
9 Chile 24 Spain
10 Russia 25 Denmark
11 Sweden 26 Belgium
12 Australia 27 The Netherlands
13 Portugal 28 Hong Kong
14 Poland 29 South Korea
15 UK 30 Japan

Jessica Ground, global head of stewardship at Schroders, said that it was “extremely encouraging” to see sustainable investing is on the rise.

While profitability remains the central investment consideration, interest in sustainability is increasing – and is especially strong in some “surprising areas”.

‘Intertwined’

“Investors also see sustainability and profits as intertwined,” she said. “They are looking to allocate to companies that are successfully navigating social and environmental change to generate profit and impact.

“Investors understand the impact that issues such as strong corporate governance and diversity can have in generating profits – views that are backed up by the research.

“Social and environmental change is happening faster than ever. The challenges posed by climate change, inequality and demographics are sizeable. Our study shows that investors are willing to play a role and value the impact that investments in green technology and social impact can have.”

The survey found that sustainable investing is growing in importance to investors with 78% of respondents stating it is more important to them now than it was five years ago; 32% said it was significantly more important and 46% said it was somewhat more important.

Investment topics

The survey also highlighted that sustainable investing was the top choice of investment topics people would most like to improve their knowledge of, ahead of subjects such as asset classes and the effect of compounding.

Moreover, investors are increasing the share of money they are allocating to sustainable investments – 64% of investors said that they have increased their investment in sustainable funds over the last five years – a trend that appears to be stronger in Asia and the Americas than Europe, as the table, below, highlights.

Investors that said sustainable investing is more important than five years ago

Investors that stated they have increased their investment over the last five years

Global

78%

64%

Europe

75%

58%

Asia

80%

68%

Americas

81%

70%

The survey showed that investors see sustainable investing as a way to drive not only societal, social and environmental change but also generate profits.

When asked whether they invested in sustainable funds for the positive impact or potential profit, the average response across all fund types showed that positive impact had a greater importance (38%) than profit (32%). However, the proportions were similar – on average, potential profit is also seen to be an important desired outcome from investing in sustainable investment funds, as well as  positive impact, such as bringing about societal, social or environmental change.

The two fund types which bucked the global trend, with profit scoring higher or the same as positive impact were:

  • Investors said that investing in funds focusing on corporate governance was more likely to be for profit than for positive impact (37% vs 30%)
  • Investing in medical science and biotechnology funds showed equal weighting between positive impact and profitability (36% vs 36%)

Investors scored the following funds higher on positive impact:

  • Positive social impact funds such as human rights, poverty and social welfare 46% vs 25%
    (positive social impact vs profitability)
  • Funds that invest in green technologies 43% vs 31% (positive social impact vs profitability)
  • Funds that avoid oil, gas or coal companies 37% vs 31% (positive social impact vs profitability)
  • Funds focused on improving diversity 34% vs 32% (positive social impact vs profitability)

For the Schroders Global Investor Study 2017 full report please visit www.schroders.com/gis.

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Gary Robinson

Commercial Director, Head of Video at International Investment.