One take-away finding of the Schroders report is that the UK could see the rise of more "expert" investors in the space of ESG and sustainability.
The sustainability-focused findings of Schroders' study identified that under a third of the average UK portfolio was allocated to sustainable funds – but still ahead of their global peers overall – although the US is leading the pack.
A third of UK investors allocate 31 to 50 per cent of their portfolio to sustainable investments compared with a quarter of global investors investing the same proportion.
And more than half of UK investors said that a thematic approach to sustainable investing has become more appealing over the last six months, with education alongside health and wellbeing identified as the themes they concentrate on.
The London-listed wealth management firm examined attitudes towards ESG and sustainable investing at a time when the topics remain ubiquitous in the wealth sector. The energy crisis, worries about global warming, standards of governance of companies in some countries and other concerns combine to keep these subjects at the front of clients' minds, so industry figures say.
The research identified investors in Greece as having the lowest allocation to sustainable investments in Europe at 24 per cent, but it is Japanese investors who stand apart from the rest of the world by some margin at only 15 per cent, Schroders said in a statement.
The country with the highest allocation level was the US at 38 per cent demonstrating the scope for potential growth that remains among UK investors.
The study also identified factors that were still impacting UK investors’ ability to invest sustainably. The biggest barrier was a lack of transparency and reported data from providers about the sustainable impact of their investments, with 51 per cent identifying this as a key reason. In addition, almost three-quarters of the 1,000 UK investors surveyed stated that they were overwhelmed with the amount of sustainability-focused information that was available.
However, just under three-quarters of UK investors believe that investing sustainably is the only way to ensure profitability in the long term, Schroders continued. This was supported by the global findings which also found that more than two-thirds of people who class themselves as having “expert/advanced” investment knowledge believe sustainable investment is the only way to ensure profitability.
With a higher percentage of people in the UK having access to education on sustainable investing compared with 48 per cent globally, the UK could see more “experts” emerging in the future, potentially encouraging greater take-up of sustainable investing, Schroders said.
Welcoming the findings, Doug Abbott, head of UK Intermediary at Schroders said: “This study demonstrates that, for UK investors, sustainable investing is still a priority. It is therefore encouraging to see that interest is continuing to rise year-on-year as both environmental and societal challenges increasingly become issues we cannot ignore.”
“We are hopeful that, as the investment knowledge of UK investors continues to rise, even more investors will seek out sustainable investments. We are committed to providing the best range of sustainable investment solutions, funds and investment trusts for both existing UK investors who are already familiar with this space, as well as for those who are yet to embrace this area,” he added.
Andy Howard, global head of sustainable investment at Schroders added: “Financial education is a key element in driving more capital towards sustainable investing. It is clear from our research that what people seek is essentially guidance and clarity. The more people are able to understand the products they invest in and their impact on society and the environment, the more capital we should see flowing into sustainable investing.”