Environment, social and governance (ESG) factors are playing an increasingly important role in the decisions of UK investors, new research by Butterfield Mortgages Limited (BML) has found.
Environment, social and governance (ESG) factors are playing an increasingly important role in the decisions of UK investors, new research by Butterfield Mortgages Limited (BML) has found.
ESG refers to the three central factors in measuring the sustainability and societal impact of an investment. ESG investments typically seek to balance positive returns against the long-term impact on society or the environment.
Mortgage lender BML commissioned an independent survey among 735 UK investors, all of which have portfolios worth in excess of GBP20,000, not including any primary property, savings, pensions or SIPPs. It found that 24 per cent had made an ESG investment in the past.
Just over a fifth (21 per cent) of UK investors plan to make an ESG investment in the coming 12 months, while 25 per cent intend to do so by 2025 – this figure rises to 48 per cent among investors aged 18 to 34.
More than one in five (22 per cent) investors say ESG factors have played an increasingly important role in their investment decisions over recent years, with 29 per cent stating that they will now carefully consider the environmental or social impact of the businesses or assets they invest in.
Three tenths (30 per cent) are willing to accept lower returns on an investment if it has a positive social or environmental impact. The majority (52 per cent) expect the ESG market to grow rapidly by 2026.
BML’s research also found that 60 per cent of UK investors want to see investment providers become more transparent about the environmental or social impact of different products or assets. Further, 59 per cent believe too much onus is placed on investors to back ESG causes, rather than businesses and governments driving positive change.
Alpa Bhakta, CEO of BML, says: “ESG investing has become far more prominent in recent years, yet our research reveals that it’s still in its relative infancy; fewer than a quarter of UK investors have entered into ESG investments to date. Clearly, though, the market is set for rapid growth.
“Not only are a significant number of investors now prioritising ESG factors when making financial decisions, with many intending to make ESG investments in the coming years, but we can also see that investors are open to lower returns if their investments influence positive change.”
“There is also an important call to action here for companies to do more, not only to cater to investors’ ESG priorities, but also to improve transparency around the social and environmental footprint of the products they offer.”
