Investors are going greener, according to recent research from Aviva. Here’s the word from the press office;
One of the side-effects of the Covid-19 crisis has been an increased interest in ESG investing by UK investors, a recent Aviva survey reveals.
ESG – Environmental, Social and Governance – is now the commonly-used term to describe the three main factors in measuring the sustainability and societal impact of a company or business. Other terms that might be used include ethical, sustainable, responsible, green and Corporate Social Responsibility (CSR) amongst others.
The survey of over 500 people with investments found that over half (55%) said that the pandemic had had an impact on their likelihood to take ESG factors into consideration when deciding where to invest their money. Amongst those who said they already consider ESG, 81% said the pandemic made this even more important.
And this new awareness of the importance of ESG has been borne out by customers’ investing behaviour on Aviva’s Direct platform. The value of new investments in ESG funds in the six months since March has more than doubled compared with the preceding six month period. Investing in other types of funds, meanwhile, has remained steady.
The research also indicates that investing on ESG grounds is new for many investors. Of those who already consider these factors, only a third (32%) have been doing this for over a year. By contrast, nearly half (49%) have only started within the last 6 months – coinciding almost perfectly with the shock of lockdown in March.
The survey found that it is still the more traditional environmental factors that drive investors to seek these types of investments – the ‘E’ factor – namely, those that relate to pollution (67% say this is an important factor) and climate change (58%), waste and recycling (64%) and promoting animal welfare (58%). However, those that have considered ESG for longer are more likely to be motivated, in addition, by pursuing the positive and feel they are making a difference by carefully choosing where they invest their money, rather than simply avoiding companies that do the ‘wrong thing’. There seems to be a journey emerging through ‘E’, then ‘S’ then ‘G’, as investors learn more about these investments, and what it is possible to influence through their own actions.
IE COMMENT: CASH SAVINGS, GOLD & PORTABLE ASSETS ARE STILL ATTRACTING INVESTORS
Meanwhile FT Advisor reported recently that UK investors are still thinking of boosting their cash savings, rather than buy stocks, or even property. Some 32% of those surveyed said they were setting aside more cash, as they expected more lockdowns and the subsequent economic downturn that seems inevitable in 2021. Certainly NS&I has reported huge inflows of cash into Premium Bonds, and its income saver account – despite the desrisory interest rates being offered.
The property market has boomed, with demand outstripping supply. Given that the UK is still allowing mass migration to continue it seems likely that demand for houses and flats will continue to rise sharply throughout the 2020s. The only question mark for buy-to-let investors is that politicians may pass further laws strengthening tenants rights, to the point where rent may be witheld for a variety of reasons, or that rents may be capped in certain urban areas – thus destroying most of the actual return on the investment.
The surge in gold bullion seems to have run its course for now, although its attraction as a portable asset, accepted globally, will always win over some investors who see it as the ultimate `pack a bag’ emergency investment. Likewise, classic cars, guitars, watches or art, also have a portable element and HNW individuals see them as safe havens that cannot be tracked digitally by governments so easily as cash savings or stocks.
There are interesting times ahead.