Investors largely agree that responsible investing is a source of good for the economy and society, but concerns about greenwashing and a backlash against ESG may have led to second thoughts, according to a survey released Tuesday by the Responsible Investment Association (RIA).
The 2022 RIA investor opinion survey found that interest in RI has fallen to 64% from 73% in 2021.
Almost half (40%) of respondents said they were more likely to choose RI than one year ago. In comparison, interest increased strongly between 2018 (60%) and 2020 (72%).
Ownership of responsible investments has remained relatively unchanged over the past three years. One-third of respondents (33%) said they own investments that incorporate ESG factors, compared to 31% in 2021 and 33% in 2020.
“It’s clear that investors are thinking about social and environmental issues and want their portfolios to reflect their concerns,” said Patricia Fletcher, CEO of the RIA.
Investors aged 18-34 generally are more interested in RI (71%) than those aged 55 and older (51%), and women are more interested (67%) than men (61%).
Overall, 76% of respondents agreed that RI can have a real impact on the economy and contribute to positive change for society.
Hurdles for responsible investing
While most respondents (73%) said they’d like their financial advisors to tell them about RI options that are aligned with their values, only 31% said their advisors had done so. This segment inched higher compared to last year (27%), following updated regulatory guidance encouraging advisors to ask their clients about their investment objectives relating to ESG.
Addressing the topic could help close the gap in RI knowledge, which remains low: 70% say they know little to nothing.
“This is an opportunity for financial advisors that are knowledgeable about responsible investing to meet investor demand and provide investment opportunities that align with their clients’ ESG preferences and personal values,” said Fletcher.
Another hurdle is fear of greenwashing in the investment industry. Three quarters of respondents (75%) said they were concerned about greenwashing, similar to the level expressed in 2021. Meanwhile, 78% of respondents agreed that there needs to be increased regulation and scrutiny in the investment industry to combat greenwashing.
The topic of biodiversity loss also resonated with respondents. Almost three quarters (74%) said they were concerned and 68% agreed it was important that companies are committed to preventing biodiversity loss.
The survey was sponsored by AGF Investments Inc. and Desjardins Group and the findings were based on an Ipsos poll of 1,005 individual investors in Canada conducted between Nov. 2 and Nov. 8, 2022.