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The league table of countries with the most 'caring' investors

Andrew Oxlade
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China Daily Life
Investors in China expressed concern about social and environmental issues (Source: Getty)

Europeans are less concerned about environmental issues when it comes to selecting investments than Asians or Americans, according to a major study of attitudes in 28 countries.

Investors in Asia were far more likely to consider environmental concerns, particularly those in Indonesia and Thailand. Investors in China and India also ranked the importance of these issues highly.

The findings were echoed across responses to a range questions on responsible investment, which included governance and social issues.

Overall, Asian investors expressed most concern and Europeans were least likely to sway investment decisions because of these issues.

The results, part of a wider Schroders Global Investor Study, contrast with the current geographical spread of the world’s responsibly-invested assets, as measured by the Global Sustainable Investment Alliance.

Its most recent figures, from 2014, show 64% of these assets were in Europe compared to 31% for the US or less than 1% for Asia.

Jessica Ground, Global Head of Stewardship at Schroders, said: “European countries have implemented significant amounts of environmental legislation and European investors are widely considered to be at the forefront of the responsible investment movement. But we have seen a rising and sustained interest in environmental and social issues from Asian and North American investors.

“What we could be seeing is a major change in attitudes around the globe in terms of concerns, and perhaps a difference in the way in which citizens around the world will invest in the future.”

The publication of the data follows the United Nations Climate Change Conference, which concluded on 18 November.

The Schroders Global Investor Study collected responses from 20,000 individuals in 28 countries who had a minimum of €10,000 (or the equivalent) invested. It asked a range of questions about attitudes to investments.

Respondents were asked to score out of ten how important they felt environmental, social and governance issues, or “ESG”, were when making investment decisions. The average ratings by region are shown in the table below.

Issue

Europe

Asia

Americas

GLOBAL

Good corporate governance (e.g. fair pay to workers)

6.8

7.4

7.7

7.2

Good record of social responsibility (e.g. diversity, human rights)

6.6

7.1

7.5

6.9

Positive impact on the environment (e.g. climate change policies)

6.5

7.0

7.3

6.8

Positive impact on local social outcomes (e.g. poverty, homelessness)

6.4

6.9

7.3

6.7

Positive impact on global social outcomes (e.g. world poverty, climate change)

6.3

7.0

7.2

6.7

Europeans as a whole, scored below the global average in every category of issue. Investors in the Americas overall, however, scored above the average each time.

The table below shows the highest and lowest scores on one of the issues – environmental concerns.

The study found a high level of concern in the US, where climate change is a politically charged issue and evidence is frequently challenged. China, which is frequently criticised over its record on environmental issues and its reliance on fossil fuels, ranked third in the table, with investors giving an average score of 7.7 for the importance of environmental issues in investment selection. The US ranked ninth with a score of 7.2.

Japan had the lowest score of 5.6 for environmental issues.

Level of importance a positive impact on the environmental has when making investment decisions; average rating on the scale: 0=Not at all important - 10=Critical

Country

Score

1. Indonesia

8.5

2. Brazil

8.2

3. China

7.7

4. Chile

7.6

4. India

7.6

4. Thailand

7.6

7. South Africa

7.3

7. Taiwan

7.3

9. US

7.2

10. UAE

7.1

10. Italy

7.1

10. Russia

7.1

13. Portugal

6.9

14. Spain

6.8

15. France

6.7

15. South Korea

6.7

17. Hong Kong

6.6

17. Singapore

6.6

19. Canada

6.5

20. Germany

6.4

20. Poland

6.4

22. Australia

6.2

23. Sweden

6.1

23. Switzerland

6.1

25. Belgium

6.0

25. UK

6.0

27. Netherlands

5.9

28. Japan

5.6

Full rankings for countries across a range of issues can be found on a longer version of this story here.

Overall scores

Across the five questions asked (the league tables for each of these can be found in the link above) Japanese investors were least concerned, (based on an average of all answers), just below the Netherlands, Belgium and Sweden. In contrast, investors in Indonesia, Brazil and Thailand were the most likely to consider these issues when investing.

Millennials vs baby boomers

The Schroders Global Investor Study also found millennial investors – defined as those aged 18 to 35 - were far more concerned with ESG issues than older generations, offering an average importance score of 7.3 out of 10.

This compared with 6.6 for those aged 36 and over. Baby boomers and older investors offered the lowest scores, at 6.2 for those aged 55 to 64 and 5.8 for those aged 65-plus.

Millennials were also more likely to sell due to a range of concerns, shown below. The biggest discrepancy between age groups was on the issue of a company in the news for the wrong reasons (8% more would definitely sell), followed by companies using animal testing (7% more would definitely sell).

ISSUE

Millennials

Aged 36+

Disparity

In news for wrong reasons, e.g. product recalls

31%

23%

8

Using tax minimisation schemes

31%

24%

7

Use of animal testing

36%

29%

7

Negatively contribute to climate change

32%

26%

6

Associated with tobacco or alcohol products

24%

18%

6

Poor record of social responsibility

36%

32%

4

Assoc with gambling activities

31%

29%

2

Assoc with weapons manufacturing/dealing

38%

37%

1

Assoc with pornography/sex industry

37%

40%

-3

Links to repressive regimes

38%

42%

-4

Showing the proportions of those that would ‘definitely move’ their money out of an investment that was performing well, if they discovered it was invested in these types of companies.

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Important Information: The views and opinions contained herein are those of Andrew Oxlade, Head of Editorial Content, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The sectors and securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA. Registration No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.

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