MEDIA RELEASE: “Expert” investors are more likely to believe that investing sustainably is key to driving long-term returns compared with people who rate themselves as less knowledgeable, the Schroders Global Investor Study 2022 has found.

The sustainability-focused findings of Schroders’ flagship study, which has surveyed more than 23,000 people who invest from 300 locations globally, found that close to three-quarters (73 per cent) of investors who classify themselves as having expert investment knowledge believe that investing sustainably is the only way to ensure profitability in the long term of investors, compared to 50 per cent of investors with intermediate knowledge, 35 per cent of beginners and 63 per cent of investors overall.

Sustainability drivers and education

Of all the drivers that would encourage investors to increase their sustainable investments, the most common was the ability to choose investments that aligned to their personal sustainability preferences (54 per cent). Of those preferences, environmental impact was the main reason why investors are attracted to sustainable funds, at 51 per cent. This has increased slightly from 48 per cent in 2021 and 50 per cent in 2020 and remains more important than financial gains, which ranked third at 43 per cent on the list of priorities.

However, choosing a fund that focuses primarily on delivering financial returns while integrating sustainability factors remains important for more than half (57 per cent) of investors.

The study also found that while the concept of sustainable investing isn’t new, there are still barriers to investment. Greater transparency may be the solution, with more investors concerned about the lack of transparency and reported data (49 per cent) and by a lack of clear, agreed definitions (45 per cent) than concerns over performance (31 per cent of investors).

Investors in Australia acknowledge that sustainability is important but overwhelming. In all, 62 per cent feel there is too much information and education, and this is a barrier to investing. This demonstrates the important role companies and financial advisers play in articulating the benefits of for investors. Meanwhile, 66 per cent of investors think that providers and financial institutions are greenwashing through marketing material and 41 per cent rely on their financial adviser to outline sustainable investment options.

Attitudes towards sustainability

Australian investors are allocating a third of their investment portfolios to sustainable funds, which is in line with global results (30 per cent), with the goal of making a difference to diverse range of areas, including improving the quality of education (48 per cent), clean water and sanitation (45 per cent), health and wellbeing (44 per cent) and reduced inequalities (38 per cent).

Schroders’ sustainability investment director Stephanie Hukins said: “It is encouraging that 91 per cent of investors recognise the attractiveness of sustainable investments, and they want their investments to positively affect society and the environment. With some investors saying there is too much information circulating about sustainable investing, the onus is on investment providers and financial advisers to highlight the most important information to help investors make the right decisions for them.”

According to Sam Hallinan, Schroders Australia CEO: “Unsurprisingly, sustainable investing continues to gather momentum. The majority of Australian investors would most like to invest in funds that integrate sustainability factors whilst also focusing on returns.

“Sustainability factors are integrated into all of Schroders’ investment strategies globally and we remain committed to delivering outcomes for our clients.”