Survey shows retail investors turning away from ESG investing

A recent survey showed retail investors turning away from ESG investing due to a lack of knowledge and price sensitivity; it concluded that the majority of DIY investors still prioritise profit over sustainability when making investment decisions – writes Shamillia Sivathambu

 
The survey, which polled over 1800 of Capital.com’s clients globally, concluded that the majority of Do-It-Yourself (DIY) traders and investors do not prioritise Environmental, Social and Governance (ESG) factors when making trading and investing decisions, citing a lack of knowledge and high fees as obstacles.

It found that 52% of traders and investors have never selected a stock or made a trade based on ESG criteria. When asked why they have never selected a stock or made a trade based on ESG factors, 46% of respondents said they did not know how to do so, while 12% thought ESG investments were ‘too expensive’.

In presenting its results, Chief Commercial Officer Kypros Zoumidou said: ‘The findings of our survey show a lack of awareness and information around sustainable investing. This information gap has clearly impacted the adoption of ESG among DIY investors, which is compounded further by a perception that sustainable investments come at a premium.

By making ESG data more widely available to all investor groups, including self-directed retail investors and traders, we can level the playing field and empower more people to make sustainable choices.’

The survey also revealed that more than half of DIY traders and investors (53%) make decisions based on profitability rather than social or environmental impact.

Only 7% of respondents cited ‘social and environmental reasons’ as their criteria when making an investment decision while 40% of respondents said that both ‘profit’ and ‘making a positive social and environmental impact’ were important to their investment selection strategy.

‘ESG factors can be useful additional analysis when making a decision to buy a certain stock. How a company manages its exposure to climate change or human rights, for example, could have a significant impact on its stock’s performance.

A company well-equipped to face ESG issues is more likely to be resilient over the long term and therefore more sustainable,’ added Mr Zoumidou.
 
More information at Capital.com >