Majority of end investors believe their investment decisions can have an impact on climate change

More than two-thirds are interested in sustainable investing, research by Fundamental Media finds, but 76% believes there is not enough information available on the topic

Key findings:

• More than two-thirds of European end investors are (very) interested in sustainable investing, with the highest figures seen in Italy and the UK
• 76% of respondents strongly or somewhat agree with the statement that there is not enough information available on sustainable investing
• The vast majority of end investors believe their investment decisions can have an impact on climate change and on social and economic issues, and that sustainable investments may provide better returns than traditional investments

More than two-thirds of European end investors say they are (very) interested in ESG, but financial advisers, wealth managers and asset managers could do more to educate them on the issue. Because more than three-quarters strongly or somewhat agreed that there’s not enough information available on sustainable investing, research by Fundamental Media found.

During a time when investors are increasing their allocations to ESG investment strategies, these strategies have been facing performance woes. According to IPE, the year 2022 has been less of a success for global ESG equity strategies as for the first half of the year, 78% underperformed their benchmark, with the median underperforming by 2.5 percentage points. It will be interesting to see whether this effect is a short-term one.

For our European end investor research, we surveyed 4,390 end investors across Germany, the UK, Italy and France. Questions focused on end investors’ views on various investment products, saving for retirement and ESG as well as their investing behaviour, how they pick their investments and their media usage.

While the term ESG is used frequently by the professional investment community, our research shows that many end investors are still unsure what the term means specifically. Only 27% of European end investors associate the term ESG with Environmental, Social and Corporate Governance, with French respondents being the most likely to know the meaning of the term (at 30%).

Nonetheless, more than two-thirds of European respondents indicate they are (very) interested in ESG/sustainable investing. This figure is highest in Italy (76%) and the UK (72%). At 10% each, France and Germany have the highest percentage of end investors who have never heard of ESG. Asked why they’re not interested in ESG, many respondents indicated they don’t have enough knowledge about it, followed by the believe that returns are lower and that the topic did not matter to them.

We see similar results when respondents were asked whether they’re willing to sacrifice financial returns for a good cause: 12% strongly disagreed with this statement and a further 22% somewhat disagrees. German end investors were least willing to sacrifice financial returns (15% strongly disagreed) while in Italy this percentage was only 6%.

Furthermore, more than three-quarters (76%) of respondents strongly or somewhat agree with the statement that there is not enough information available on sustainable investing. In Italy, 82% of respondents felt this way and in France this was 81%, compared to only 65% for German end investors.

But overall, the vast majority of end investors believe their investment decisions can have an impact on climate change and on social and economic issues, and that sustainable investments may provide better returns than traditional investments.

On average, 19% of European end investors haven’t adopted an ESG approach yet. Of those that do, 29% invest in companies that comply with ESG criteria in general and a further 29% supports companies that set positive examples of environmentally friendly products or production methods and socially responsible business practices. The remaining 22% excludes companies whose ethics or products are objectionable, such as weapons, tobacco or gambling.

At 26%, French end investors are most likely not to have adopted an ESG policy yet. Supporting companies that set positive examples is the most popular ESG approach in all countries surveyed, apart from France where 28% of end investors invest in companies that comply with ESG criteria in general.

When asked which UN Sustainable Development Goals (SDG) are the most important to them, climate action was the top goal mentioned by more than a third of respondents in all four of the markets surveyed. Affordable and clean energy came second in the UK, Italy and France, but a joint second with no poverty in Germany, reflecting topical concerns around current events such as the energy crisis. It was mentioned by slightly less than a third of all respondents. Partnerships for the goals, life on land, life below water and industry, innovation and infrastructure were the goals that were least often selected as being the most important.

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