ESG investments have longer-term appeal, Schroders study finds

Wind-Green-Environment-Ecology-Windmill-700.jpgThe majority of UK investors plan to hold Environmental, Social and Governance (ESG) investments longer than other investments, according to the Schroders Global Investor Study 2016.

According to the research, 69 per cent of UK investors would hold ESG investments for “longer than usual”, with 89 per cent of millenials – the 18-35 demographic – saying they would stay invested in ESG investments longer compared to 63 per cent of older investors, those aged 65 and over.

Over a third of investors, 35 per cent, said they would remain invested in companies with strong ESG philosophies for two years longer than other investments.

The study of 1,000 UK investors found that on the whole millenials valued ESG factors more than older investors, with millennials more inclined to sell out of companies with poor ESG records, associated with weapons manufacturing/dealing or involved in animal testing.

Good corporate governance ranked highest overall among investors’ ESG concerns, although it was more of an issue for millenials who rated it 7.2/10 compared to older investors who rate the concern 6.6/10.

Long-term growth still proved to be the priority for investors, rated 7.7/10, however ESG factors weren’t far behind, rated 6.9/10.

Jessica Ground, global head of responsible investing at Schroders, says: “The interest in ESG and corporate governance issues for investors only looks set to grow given its prevalence amongst millennials. While returns are still the most important issue, ESG’s importance to end investors means that these factors are too big for any advisor to ignore.

“While many policymakers are concerned about the rise of short -termism in markets, encouragingly, those surveyed said they would stay invested in ESG philosophies longer than they would in other investments. It is important that investors recognise the value of being invested for the long term and this is especially relevant when considering ESG factors.”