Most of us are living cleaner and more sustainable lives. We recycle more, get more of our energy from renewable sources, and some of us even drive electric cars. But does it affect how we invest?
A major new study of 22,100 people in 30 countries found a link between how sustainably people behave and how they invest their money.
The Schroders Global Investor Study 2017 found that countries with a higher percentage of consumers who practice responsible behaviours, also tend to have more investors who invest more sustainably.
For example, a high percentage of Indian and US investors who practised ethical habits also invested sustainably.
At the other end of the scale were investors in Japan and Hong Kong, who were less likely to practise sustainable behaviours and less likely to invest sustainably.
What does it mean to invest sustainably?
These were the three main definitions in the study, for what it means to invest sustainably:
- Investing in companies which are proactive in making sure their businesses are prepared for the environmental and social changes that will affect them.
- Investing in companies that are best-in-class when it comes to environmental, social or governance issues even if they are not the most attractive investments on other measures.
- Avoiding companies that are active in controversial areas such as alcohol, tobacco or weapons manufacturing.
What does it mean to behave sustainably?
The study defined behaving sustainably as:
- Buying locally produced goods.
- Buying organic foods.
- Recycling household waste.
- Considering the carbon footprint of energy/transportation usage.
- Buying from businesses with a good social record.
- Avoiding businesses with a track record of controversies.
The chart below illustrates the trend of investors who act sustainably also tend to invest sustainably.
- The blue columns show the percentage of investors in each country who behave sustainably.
- The dark blue line shows the percentage of people in each country who invest sustainably.
The study also found that certain behaviours are more likely than others to indicate whether a person invests in sustainable funds.
- 62% of those who buy organic food also invest in sustainable investment funds.
- Only 47% of people who recycle household waste, in contrast, invest in sustainable funds.
Jessica Ground, head of sustainability at Schroders, said: “This study makes a number of important findings when it comes to attitudes and actions around living more socially responsible and sustainable lives.
"It confirms what we suspected – that in countries where attitudes have already moved towards living more sustainable lives, this is now being reflected in a greater propensity to pick sustainable investments.
“More and more people around the world are thinking this way. It underlines the importance for companies to adapt to a changing world and focus on their environmental and social impact and ensure they operate with good corporate governance.
"Those that do adapt will continue to benefit disproportionately while others will fall further behind.”
Important Information: Schroders commissioned Research Plus Ltd to conduct, between 1st and 30th June 2017, an independent online study of 22,100 investors in 30 countries around the world, including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines ‘investors’ as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years. These individuals represent the views of investors in each country included in the study.
Important Information: The views are those of David Brett, investment writer at Schroders, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. 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. 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. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA. Registration No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.