Investors like ESG and want advisors’ help with it: Survey

Most investors are interested in ESG and responsible investing, and they want their advisors to guide them, results of a recent survey from Nuveen show.

More than three-quarters (76%) of those surveyed said they agreed that factoring in risks and opportunities associated with responsible investing, or RI, should always be part of the investment process, the company found. Nearly 80% said RI incorporates material factors that are often missed in traditional financial analysis, and 68% said it can be employed to help reduce market risk in their portfolios.

“Management of risk is a demonstrated RI portfolio benefit, one that asset managers as well as financial advisors need to help interested investors discern even more clearly,” Amy O’Brien, Nuveen’s global head of responsible investing, said in an announcement of the survey findings. “Although many investors are interested in RI’s positive impact on society, in their minds, the process of managing key ESG factors should also focus squarely on mitigating critical impediments to company performance.”

The report is based on responses from more than 1,000 people in the U.S. age 21 and over who have at least $100,000 in investible assets, not including home equity or retirement account savings. The survey was conducted in July and August by The Harris Poll.

A strong majority (89%) of investors said they do or would use guidance from their financial advisors about allocations to responsible investments. However, nearly two-thirds said they also conduct their own research to inform their responsible investment choices, according to the report.

The interest in using ESG factors in investing decisions is linked to concerns people have about how public companies comport themselves.

Nuveen found that 75% of investors see their ownership in companies as a way to get businesses to address ESG-related risks and opportunities. More than half (57%) said they would be interested in shifting their portfolios to invest only in companies with net-zero emissions, according to the report. Further, over 80% said that companies should be more transparent about ESG issues, and 73% said they would be more likely to invest in businesses that are open about their plans for addressing those factors.

RETIREMENT PLANS

Only a slim percentage of 401(k) assets are in ESG-themed funds, prior industry reports have found. However, Nuveen’s survey, like others from firms such as Schroders, indicates that retirement plan savers are particularly interested in sustainable investing.

Last week, the Department of Labor’s new rule for retirement plans went into effect, allowing plan sponsors to consider ESG factors when vetting investments.

In the recent survey, 69% of people who have employer-sponsored retirement plans said that having sustainable investment options would “make them feel good about working for their employer,” with 64% separately saying it would improve how they feel about contributing to a 401(k).

There is a generational split on those sentiments, however. While 95% of millennials and Gen Z workers said they liked the idea of ESG options in plans, that enthusiasm waned among Gen Xers and baby boomers, with just 56% of people in those generations agreeing.

“Retirement plan sponsors who introduce RI options and offer education about the portfolio advantages clearly have an opportunity to build even greater appreciation and loyalty especially among employees who are early on in their careers,” O’Brien said in the announcement.

[More: DOL’s ESG rule hit with long-shot lawsuit]