COP26 May Disappoint But Younger Investors Are Putting Money Where Their Ethics Are

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  • 44% of 18-34 year olds say investing in responsible companies is more important than making as much money as possible.

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Q3 2021 hedge fund letters, conferences and more

  • 27% of over 55s say investing in responsible companies is more important than making as much money as possible.
  • 21% of those who didn’t pick responsible investments said it was just too much effort to research and switch investments.

*Results from a survey of 2,000 people by Opinium for HL in September 2021.

The Efforts Of COP26 Are Likely To Be Disappointing

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

"The collective efforts of COP26 are likely to be disappointing for many climate activists, but the pressure from investors for fresh action to lower emissions and act more responsibly will continue to be ramped up over the months and years to come. Investors are showing they will use their money when it comes to supporting companies with good sustainability credentials, even without fresh direction from governments.

There is an age split in just how important the environment, social and governance issues are when it comes to investing. More younger people have responsible investing higher up on their list of priorities than older people according to the latest HL survey*. Investing in responsible companies is more important to 44% of 18-34-year olds, than making as much money as possible. Among the over 55 age group, 27% said that investing in responsible companies was more important. Although baby boomers have more financial clout right now, Generation Z will increasingly flex their money muscles over the decades to come and companies judged to be responsible towards the planet, employees and society at large, will attract their investment.

Already investors are investing record amounts into responsible funds. According to the Investment Association, savers poured £1.6 billion into responsible funds in September – two thirds of total fund inflows. HL clients have also put record money into responsible funds on the platform with net flows up 17% in the first nine months of 2021 vs the same period in 2020.

However, there is still worry around about just how much return greener investments will offer. More than a quarter of those surveyed who didn’t pick responsible investments as being more important (27%) said it was because they wouldn’t make as much money with those investments, another 22% said it just wasn’t a priority and 21% said it was just too much effort to research and switch investments. There is still a challenge ahead about convincing more investors that investing with environmental, social and governance issues in mind is about doing the long-term profitable thing. There is also clearly a need for more clarity for investors about the claims companies make in terms of their sustainable investments. It’s increasingly evident that if there was a clearer set of criteria on sustainability, investors may feel more confident about putting money where their ethics are."

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