A fifth of the UK public would invest all of a GBP50k windfall in companies with high ESG scores
People would be more likely to invest in companies with high ESG scores if there was a simpler ESG rating system, according to online research for HSBC Global Asset Management by YouGov.
Currently, should they receive a GBP50k windfall, (17 per cent) would invest all of it in companies with high ESG scores compared (21 per cent) who would invest none of it in these companies. The research, which surveyed over 2,000 people across the UK, highlights that a lack of knowledge around ESG investment products that are available to them (29 per cent) and a limited understanding of how ESG issues affect investments (25 per cent) were the main reasons for this.
The findings show some variations across age groups. Those aged 55 and over are more likely to allocate none of their windfall (26 per cent) to companies with high ESG scores than 25-34 year olds (15 per cent). A fifth (21 per cent) of those aged 45-54 were likely to allocate the entire windfall followed by of 18-24 year olds (19 per cent).
Those that would not allocate all of their windfall to companies with high ESG scores (83 per cent) said the most common reason for not doing so was a lack of knowledge of the ESG products available to them (31 per cent), followed by a lack of understanding of ESG issues and their potential impact on investment (26 per cent) and the worry it would sacrifice returns (24 per cent).
When asked what would make them change their mind about investing the £50k windfall in ESG investments, just over a third of these respondents (34 per cent) said they would do so if there was a simple rating system to help them judge the ethical score of each company. This was closely followed by no extra cost / impact on returns (33 per cent), more understanding about the positive impact the investment could have (32 per cent) and if a financial adviser explained the benefits of ESG investments to them (30 per cent). A quarter (25 per cent) said nothing would change their mind.
Daniel Rudd, Head of External Wholesale UK & Ireland, HSBC Global Asset Management, says: “Advisers are increasingly telling us that their clients want to understand more about ESG in relation to their investments. However, this research proves that more needs to be done to help consumers understand how ESG factors affect investments and the positive impact that companies with high ESG scores can have on portfolios.”
Simon Howard, CEO, UKSIF (UK Sustainable Investment and Finance Association), adds: “This data shows the potential market for advisers in ESG. Nearly half of people would go to an adviser and will respond to good advice on ESG. The combination of those factors show the opportunity for the profession - advise on ESG to differentiate yourself and to show real value to your clients”.
When asked about where they would seek investment advice for their GBP50k windfall, respondents would be most likely to seek investment advice from a financial adviser (46 per cent). However, respondents are more likely to opt for a financial adviser not provided by their employer (43 per cent) compared to one provided by their employer (9 per cent). A third would either ask friends and/or family (33 per cent).