For our latest UBS Investor Watch, we surveyed more than 5,300 investors in 10 markets on sustainable investing. We found that, while some investors understand the basic concept, confusion about sustainable investing terms, its various approaches and even its impact, is widespread. For example, investors make little distinction among the three major sustainable investment approaches: exclusion, integration and impact investing (to make this easier, we included a glossary here).
Better education often leads to higher adoption. Sustainable investors, for example, were influenced by multiple sources, including professional Advisors, family, friends and media. Nine in 10 cite an Advisor’s impact on their decision to invest sustainably.
Adoption of sustainable investing varies dramatically across markets. For example, the emerging markets of China and Brazil indicate they have the highest rates of adoption, while only 12% of US investors have any sustainable investments (defined as at least 1% of assets allocated to sustainable investments).
Few investors expect to sacrifice returns when investing sustainably. In fact, 82% believe the returns of sustainable investments will match or surpass those of traditional investments. Investors view sustainable companies as responsible, well-managed and forward-thinking – thus, good investments.
Should investors prove to be right, more companies will likely adopt sustainable practices. Perhaps then, the world will be a better place indeed.
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Sustainable investing integrates societal concerns, personal values or an institutional mission into investment decisions.
Three main ways to invest sustainably:
Excludes companies or industries from portfolios where they are not aligned with an investor’s values.
Integrates environmental, social and corporate governance (ESG) factors into traditional investment processes, seeking to improve portfolio risk and return.
Invests with the intention to generate measurable environmental and social (E&S) impact alongside a financial return.
A minority of investors are engaging in sustainable investing
Globally, adoption of sustainable investing varies widely
Percentage of investors who say they have at least 1% of investable assets in sustainable investments
Uncertain impact and confusion hold investors back
Investors have high return expectations for sustainable investments vs. traditional investments
Momentum builds for sustainable investing
Investors with sustainable investments
Chinese interest in sustainable investing is high
Younger investors and women leading the way when it comes to sustainable investing in China
Chinese investors’ outlook is grounded in a passion for philanthropy
Impact matters more than returns to Chinese investors
For those without sustainable investments, barriers remain
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About the survey
For this edition of UBS Investor Watch, we surveyed more than 5,300 high net worth investors (with at least $1 million in investable assets). The global sample was split across 10 markets: Brazil, China, Germany, Hong Kong, Italy, Singapore, Switzerland, UAE, the UK and the US. The research was conducted between June 2018 and August 2018.