Seventy-one percent of active individual investors describe themselves as interested in sustainable investing, and nearly two in three (65 percent) believe sustainable investing will become more prevalent over the next five years, according to a new survey by the Morgan Stanley Institute for Sustainable Investing.
The Sustainable Signals report examines the attitudes and perceptions of individual investors towards sustainable investing and considers the broader implications for investors, corporations and governments.
The survey finds Millennials and women at the forefront of sustainable investing and sustainability. Millennials are the most open to the idea of sustainable investing (84 percent) as compared to Gen X (79 percent) and Baby Boomers (66 percent). Millennials are twice as likely to both invest in companies or funds that target specific social/environmental outcomes and divest because of objectionable corporate activity.
Women are also leading the way, with 76 percent of surveyed investors showing interest in sustainable investing, compared to 62 percent of men. Female investors are nearly twice as likely as male investors to consider rate of return as well as the impact of their investment when making an investment decision (40 percent vs. 23 percent).
The survey shows how individual investors already factor sustainability into their investment decisions and show that there is still room to grow. Related findings include:
- Nearly three out of four active individual investors (72 percent) believe that companies with good Environmental, Social and Governance (ESG) practices can achieve higher profitability and are better long-term investments.
- Individual investors say that on average 46 percent of their total portfolio should be invested sustainably.
- At the same time, investors are divided over the perception of sustainability and financial gains as being a trade-off (54 percent yes vs. 46 percent no).
In related news, a recent report by the Global Sustainable Investment Alliance (GSIA) found that the global sustainable investment market has grown “substantially” in the past two years with assets reaching $21.4 trillion by the start of 2014. However, sustainable investing still faces plenty of challenges despite this encouraging growth.