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ESG not a priority for investors, despite COP26 efforts

by LLB Reporter
3rd Dec 21 8:22 am

UK investors are failing to prioritise sustainable and ESG investments, despite COP26 and Government action to tackle climate change, new research  from  HYCM  has found.

The trading broker commissioned an independent survey of 857 UK-based investors, all of whom have investments worth in excess of £10,000, excluding their property, savings and pensions. It found that less than half (45%) consider sustainable investing to be a priority in their portfolio management.

A significantly higher proportion (60%) of younger investors (18-34) said that sustainable investing is important to them, compared to just 30% of those in the over-55 demographic. Likewise, when asked about their investment strategies for the coming year, 52% of younger investors stated they plan to invest in more sustainable assets under management, in contrast to only 12% of over-55s.

Meanwhile, less than a third (28%) of investors said that the Government’s stance on climate change and COP26 discussions have accelerated their plans to invest in more sustainable assets. A similar number (31%) believe the UK Government is doing enough to encourage green and ESG investment.

Elsewhere, HYCM’s study revealed that the recent energy crisis has made 38% UK investors wary of making sustainable, green, or ESG investments. This figure rose to 58% for those with investment portfolios in excess of £500,000.

While just 19% of investors consider ESG investments to be a savvy financial strategy at present, 33% do plan to invest, or increase their investment, in green energy, such as wind power, water stocks and solar energy in the next 12 months.

Giles Coghlan, Chief Currency Analyst, HYCM, said: “If recent COP26 discussions and Government efforts to curb climate change have made anything clear, it is that we are in the midst of a climate crisis. However, our research shows that investors are in no rush to hop on the ESG bandwagon, potentially due to concerns surrounding greenwashing or the performance of sustainable investments.

“At the moment, investors remain broadly sceptical about ESG, and a least in the short-term, all bets are off that we will see any immediate investor activity off the back of the summit. But that said, it is important not to make any sweeping statements about the ESG landscape: younger investors and those with larger portfolios are comparatively optimistic about prospects for green investment and are considering this as a keen focus in their strategies.

“Expect this sunnier outlook to feed into the corporate mentality, as titans like Microsoft and Nike will likely be keen to establish their ESG credentials. In the pivot towards a greener future, renewable energy looks set to increase demand for copper, which usually enjoys a strong springtime, so this is something investors should monitor closely.”

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