Sustainable Investing: How Interested Are Individual Investors?

Solar panels in Rockbeare, England. Photo by RedZeppelin/ Pexels.

by Matt Davies

January 31, 2024

According to this year’s “Sustainable Signals” report, published on January 30, the interest of individual investors in sustainable investments is “high and rising.”

Conducted by Morgan Stanley, a leading global provider of financial services, the report is based on a survey of 2,820 individual investors in the US, Europe and Japan. The aim was to “assess interest in sustainability and understand where investors see the most opportunity and potential risk.”

The findings portray a shifting landscape where the majority of investors show interest in having positive environmental and social impacts. For example, 77% of individual investors are “interested in investing in companies or funds that aim to achieve market-rate financial returns while considering positive social and/or environmental impact.”

“Nearly 80% of individual investors believe that it is possible to balance market rate financial returns with a focus on sustainability,” said Morgan Stanley’s Chief Sustainability Officer and CEO of the Institute for Sustainable Investing, Jessica Alsford. “A majority of individual investors also express a desire for their investments to advance positive environmental and social impact, creating opportunities for finance professionals to meet these needs.”

Importantly, 57% of surveyed investors reported that their interest in such investments has increased over the last two years, while 54% said they plan to increase investments in 2024.

As to the top sustainable investing themes, 15% of surveyed investors picked climate action; 13% selected healthcare, 11% water solutions, and 11% circular economy.

Almost 80% of investors said they consider a company’s carbon footprint and commitment to reduce emissions when making new investments. However, 51% also said they would consider investing in traditional energy companies “as long as robust plans to reduce emissions and address climate change are in place.”

And what’s holding investors back from making sustainable investments? According to the survey, key here are the “lack of transparency and trust in sustainability reporting,” reported as a concern by 53% of respondents, and the greenwashing potential, a worry expressed by 61% of investors.

Meanwhile, over half of respondents, 52%, said they lack sustainable investment knowledge while 47% cited a lack of available financial products as a reason for not investing.

As the Morgan Stanley report notes, these findings “indicate increased opportunity for asset managers and investment platforms to help investors meet their sustainability goals,” and investors “could benefit from the guidance of investment professionals.”

As 58% of global investors express willingness to select a financial advisor or investment platform based on sustainable offerings, the stage is set for financial professionals to play a crucial role in shaping the sustainable future of investments.

This article was originally published on IMPAKTER. Read the original article.

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