A study of adults in the US and UK shows that awareness of, and interest in ESG investment approaches is rising, with some differences between the two countries.

US investors polled recently have turned far more positive about putting money to work in a way that has an impact on causes beyond simple financial returns. 

The findings, coming from a study from asset manager American Century Investments®, drew responses from US and UK investors. The survey was conducted among a representative sample of 1,003 US adults and 1,004 UK adults, 18 years of age and older from August 8-11 and August 9-14, 2019, respectively.

Whether it is an investment that considers environmental, social and governance factors or socially responsible investing, 56 per cent of US survey participants and 59 per cent of UK respondents say the concept is either "somewhat" or "very appealing." For US respondents, this is up from 49 per cent in 2018 and 38 per cent in 2016.

American Century Investments surveyed 1,003 US adults (18 years or older) to have a better understanding of generational and gender-based attitudes toward impact investing. For the 2019 study, the firm also surveyed 1,004 UK adults to gauge potential similarities to or differences from US respondents.

The wealth management industry has embraced ESG and related ways of managing money in recent years for several reasons: rising client demands at a time of heightened concerns about the environment, welfare concerns and transparency of business dealings. Younger adults, such as the Millennial generation, are assumed to be more focused on these areas than their parents’. The jury is out on whether ESG factors make clients better off in the long term, according to Morgan Stanley Capital International, the indexing organization more usually known as MSCI. Its comments are significant because many fund managers use MSCI indices to compare their funds against others. 

With firms such as UBS, Indosuez Wealth Management, BNP Paribas, Cornerstone and Tiedemann Advisors making a noise about their ESG efforts, it looks as if firms are trying to carve out a name for themselves in this area. Even if debate continues on ESG’s merits, wealth managers know they have to be at the table.
 

The ACI report also found that Millennials (ages 21 to 38) displayed heightened interest in impact investing in both the US and the UK, at 65 per cent and 72 per cent, respectively. While slightly lower, 55 per cent of Gen X (ages 39 to 54) US respondents find it appealing compared with 64 per cent of their UK counterparts. Appeal among baby boomers (ages 55 to 73) drops to 49 per cent in the US and 46 per cent in the UK.

"The findings of our study reaffirm that interest in impact investing continues to be on an upward trajectory across all age groups, but most importantly, it is encouraging to see that Millennials are in the driver's seat for impact investing,” Guillaume Mascotto, vice president, head of ESG and investment stewardship at American Century Investments, said.

Nearly two-in-five US Millennials plan to invest within the next five years, compared with one-in-three UK Millennials.

"These trends are a significant signal to asset management firms that they will need to enhance their investment standards in an industry that will soon have to meet the expectations of more socially and environmentally responsible Millennials," Mascotto said. "As this generation increasingly demonstrates a desire to align their positive intentions to address global pressing issues with their investment choices, it is crucial that we understand their values and preferences so that we can properly assess both opportunities and risks."

While "return on investment, risks, fees and length of time" are the top considerations when making investments, 64 per cent of UK respondents say that "impact on society" is either "very or somewhat important," compared with 57 per cent of US respondents.

Getting more familiar
In other findings, the study showed that familiarity with impact investing continues to increase:

-- 20 per cent in 2016 (US); 
-- 24 per cent in 2018 (US); and 
-- 30 per cent in 2019 (US) vs 36 per cent in 2019 (UK). 

When investing, the percentage of respondents who believe impact on society is either very or somewhat important is increasing:

-- 2016 – 42 per cent (US); 
-- 2018 – 54 per cent (US); and 
-- 2019 – 57 per cent (US) vs 64 per cent (UK).

The study was fielded using Engine's twice-weekly Online CARAVAN® Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult US and UK population.