ECG investment funds

Environmental, social and corporate governance (ESG) investing is set to continue its growth this year, with 12% of investors planning to move money into ESG funds in 2021.

New research from investment firm OnePlanetCapital has found that a further 17% of investors plan to make the move into ESG funds in 2022 or beyond, in an attempt to make a positive impact on the planet.

The survey of 2,005 UK investors found three-quarters saying that investing in businesses which are tackling climate change is important to them.

70% of investors surveyed will avoid investing in businesses which have a negative impact on society, corporate governance or the environment. And 28% would consider taking more risk with their portfolios if the move contributed to tackling climate change.

The research found that one in 10 investors currently hold ESG investments in their portfolios.

It was younger investors, those in the 18 to 35-year-old group, who are most likely to move into ESG funds in the future, with 77% saying ESG principles are important to them. For over 55s, 71% said the same.

ESG investment preferences were most common in London, with 18% of investors already investing in sustainable funds. 12% of investors in the South East and South West invest in ESG funds, with 10% or less in other regions making sustainable investments.

Matthew Jellicoe, co-founder of OnePlanetCapital, said:

‘We are hugely encouraged to see a real desire amongst the investor community to invest in ESG as we plot a course for the post-COVID economic recovery.

“ESG is highly regarded among investors. The world is waking up to both the positive and negative influences that businesses can have on the environment, and a company’s ESG credentials, or lack of, is not going unnoticed by investors.

“In order to meet the goals set out in the Paris Climate Agreement, and the UK’s commitment to end its contribution to global warming by 2050, unprecedented change is required to our global economy. We are on the verge of a green industrial revolution and we have the opportunity here to emerge from Covid-19 with a much greener, and more sustainable economy.”

Demand for investing in ESG funds is rising steadily, with the latest data from Morningstar showing a 29% increase in assets under management in ESG funds in the final quarter of last year.