UK investors are less interested in ESG investing than they were two years ago, according to research by Charles Schwab UK.
Over a two-year period, the number of investors who believe companies with strong ESG credentials are attractive investment options has dropped by 7%, from 75% to 68%.
In December 2021, more than half (55%) of investors prioritised ESG investments, regardless of whether they underperformed; this has dropped by 8% in just over a year. About two thirds (67%) now prioritise maximising returns over choosing sustainable investments.
The online survey revealed that the number of investors who consider ESG when making new investments is also dwindling − down 6% since December 2021 to 38%.
Across generations, ‘Boomer’ investors are the least likely to take ESG factors into consideration when investing (23%), followed by Gen X investors (32%), Millennials (49%) and Gen Z investors (50%).
Investors losing confidence
The belief that ESG investments provide investors with good returns is deteriorating as well, the research found. Now only 65% think they yield better returns, in comparison with 71% in December 2021.
Appetite to pay additional fees for sustainable investments has also decreased by 8%; now only half (50%) of investors are willing to take on the associated charges.
Richard Flynn, managing director at Charles Schwab UK, said: “With the need to maximise returns seemingly growing in importance amid the cost-of-living crisis, fewer investors seem to be factoring ESG-related considerations into their investment decisions.
“The return on investment is increasingly being called into question, with the fees often associated with sustainable investments now actively discouraging investors in this current climate. It will be interesting to see how any economic rebound and reduction in inflation impacts this attitude in the coming years.”
