Investors want companies to do more to help the environment

A majority of investors from around the world expect accountability from companies regarding their impact on the environment and society and want to see more action from policymakers and the private sector, including fund managers. 

In a Natixis IM survey, released as the climate change conference COP26 was wrapping up, 77 per cent said it’s their responsibility as investors to hold companies accountable for their impact on society, including climate change and inequality. Some 82 per cent said companies also have a responsibility to address social issues and 67 per cent are more likely to invest in funds that demonstrate a better carbon footprint.

$1.6 trillion in ESG funds 

Total international assets in environmental, social and governance (ESG) investment strategies now total $1.6 trillion and Natixis said it believes the ESG momentum is likely to continue to build. Of the 21 per cent of individual investors who currently use ESG investing strategies, about one quarter invested in ESG for the first time in just the past year. About one-third of investors who have already invested in ESG funds say they plan to add to their holdings. Nearly half of those not yet invested in ESG say they are interested in learning more. 

“As ESG becomes more widely adopted and investors learn more about the different kinds of ESG investments, interest in ESG investing is growing rapidly, reinforced by positive returns from these strategies,” said Nathalie Wallace, Global Head of Sustainable Investing, Natixis Investment Managers. “With governments, non-governmental organizations and private companies all showing increased commitment to ESG goals, these strategies can enable investors to pursue superior environmental and social outcomes and the financial performance they expect.” 

All age groups interested in ESG investing 

According to Natixis, one in four millennials say they are invested in ESG, but so do 20 per cent of those in Generation X and 18 per cent of baby boomers. As well, interest in ESG is high across all age segments, including 52 per cent of millennials, 52 per cent of Generation X and 44 per cent of baby boomers. 

Only one in five investors believe investing in ESG means sacrificing investment performance. In fact, the survey indicates ESG has the potential to outperform. By the end of Q3 2021, the S&P 500 ESG Index had outperformed the S&P 500 Index by 3.7 per cent for the three years ending Oct. 3, 2021. 

The Natixis survey also found that investors are deeply committed to sustainable business goals and practices. A majority (58 per cent) of investors believe they have a responsibility to help solve social issues through their investments. Their commitment extends beyond personal responsibility to fund managers, who they hold to the same standards of active engagement with investments.