Retail investors dismiss ESG in pursuit of returns
UK retail investors are willing to shrug off the environmental damage of investments as long as they deliver bumper returns, new research has revealed.
Some two-thirds of UK retail investors said they are unconcerned if their investments are sustainable and are focused solely on maximising return on their cash, according to research from investment firm Charles Schwab.
Analysts at the firm said investors are failing to vote with their wallets despite 67 per cent considering ethical stocks a good investment.
“Most investors clearly have good intentions; however, many appear to be conflicted between moral and practical investment motivations,” said Richard Flynn, UK Managing Director.
“Investors often want to invest in companies that help to improve the environment, such as renewable energy producers. However, there is a reluctance to sacrifice investment performance or pay higher fees in return.”
The low numbers come despite 71 per cent of investors surveyed saying they considered firms with good sustainability strategies to deliver good returns.
Flynn said the “paradox” in the number of investors backing sustainability showed that good intentions when investing are not always acted upon.
It comes as institutional investors and the finance industry also reconsider the impact of environmental, social and governance (ESG) investments in the wake of Russia’s invasion of Ukraine.
Around 39 per cent of fund managers said they were now reconsidering their ESG approach in light of the war last month, with the inclusion of Russian firms and weapons manufacturers in supposed socially conscious investment strategies among the top reasons cited, according to a survey of global investors by consultancy BFinance.
ESG investment strategies have been under the spotlight after it was revealed that over $9.5bn of investments billed as socially conscious were tied up in Russia prior to the invasion.