Sustainable investing key to long-term profit

Yasmine Raso

Senior Journalist, Financial Newswire

18 October 2022

New research from Schroders has revealed over half of polled investors believe sustainable investing is the key to driving long-term returns and profitability, despite there being a discrepancy in opinion between “expert” and “beginner” investors.

Surveying over 20,000 investors from around 300 global locations, the Schroders Global Investor Study 2022 found 73 per cent of investors who identify as having “expert investment knowledge” believe that investing sustainability ensures long-term profit, compared with 50 per cent of investors with “intermediate knowledge” and 35 per cent of beginners.

Respondents also said the ability to choose investments that “aligned with their personal sustainability preferences” was the main source of encouragement to invest sustainably (54 per cent). The most popular preference for investing in sustainable funds was to mitigate impact on the environmental (51 per cent), jumping from 48 per cent in 2021 and ranking higher than financial gain (43 per cent).

“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,” Schroders’ Sustainability Investment Director, Stephanie Hukins, said.

“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.”

The study also showed that despite progress made in the area of sustainable investing, investors are still concerned about the lack of transparency and reported data (49 per cent) and clear standardised definitions (45 per cent)

Many investors also believe financial institutions participate in greenwashing (66 per cent), with 41 per cent relying on financial advice to make the right investment decisions.

Just under one-third of Australian respondents (30 per cent) also said one-third of their investment portfolios is dedicated to sustainable funds, with goals ranging from improving the quality of education (48 per cent), clean water and sanitation (45 per cent), and health and wellbeing (44 per cent).

“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,” Sam Hallinan, Schroders Australia CEO, said.

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