Investors are now asserting their rights to advance environmental, social and governance (ESG) principles as they dismiss the idea that companies are solely responsible for creating value for shareholders.

A new survey finds that 77% of respondents believe it’s their responsibility as investors to hold companies accountable for their impact on society, including on issues such as climate change and inequality. Meanwhile, 82% of investors believe that companies have a duty to address social issues, while 78% say it’s the government’s responsibility (78%).

Coinciding with the 2021 United Nations Climate Change Conference in Glasgow (COP26), the survey was initiated by Natixis Investment Managers to gather the views of investors on the markets and investing. About 8,550 individual investors (with US$100,000 or more in investable assets) from 24 countries participated in the survey.

About 45% of respondents consider it important to invest in companies that are transitioning to more sustainable business models, while 67% would be more inclined to invest in funds that demonstrate a better carbon footprint, a key factor in fighting climate change.

ESG momentum

With total assets in ESG investment strategies worldwide reaching US$1.6 trillion in 2020, based on data from Morningstar, Natixis IM has seen clear signs that the ESG impetus continues to build.  

The survey finds that 21% of individual investors currently use ESG investing strategies. Of those, 24% invested in ESG for the first time in just the past year while 33% of those who were previously invested added to their existing holdings.  Nearly half 49% of those not yet invested in ESG say they are interested in learning more.

Commenting on the survey results, Nathalie Wallace, global head of sustainable investing at Natixis IM, says: “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.”

“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,” Wallace adds.

Findings from the Natixis IM survey also dismiss a number of myths around ESG investing, including the notion that ESG adoption has been driven by socially conscious millennials who want their assets to drive environmental, social and ethical change.

While ESG investing does tilt towards the younger demographic, its broad adoption suggests that it has now gone mainstream.

One in four millennials (27%) say they are invested in ESG, but so do 20% of those in Generation X and 18% of the baby boomers. Additionally, interest in ESG is high across all age segments, including 52% of millennials, 52% of Generation X and 44% of baby boomers.

A better way

And while Europe has led the way in early ESG adoption, the rest of the world is catching up. North American investors in ESG (28%) now lead those from Europe (22%) and Asia (22%).

In Asia, sentiment for ESG investing appears strongest in Thailand where investors cite motives such as improving the world, opening up new investment opportunities, and aligning their assets with their personal values.

With enhanced focus on global warming and sustainability, it is no surprise that 41% of investors in ESG see it as a way to help support the environment. However, while doing well is as important as doing good for ESG investors, they are also realistic in their views.

Just as many investors (37%) say ESG opens up new investment possibilities in line with their desire to “make a better world”, about as many (35%) think ESG is simply a better way to invest.