Survey: ESG falling down individual investors’ list of priorities amid cost-of-living crisis

The poll was conducted by British law firm Michelmores, covering 1,500 people in the UK with a minimum of £25,000 of investable assets each. Investable assets include cash, money in bank accounts and retirement accounts, stocks, bonds and mutual funds.

There was an even split between three generations: Baby boomers (born mid-1940s to mid-1960s), generation X (born mid-1960s to early 1980s) and millennials (born early 1980s to mid-1990s).

Across all three generations, 23% of respondents said they found investing in sustainable assets less important than they did in 2019, with the cost-of-living crisis cited as the key reason for this decrease in importance.

The decrease was sharpest among millennials, given that they cared about Environmental, Social and Governance (ESG) topics when making investment decisions in 2019 to a greater extent than their elders.

A significant minority (43%) of baby boomers stated that ESG impact has never been a consideration in their investment decisions. Just 6% of baby boomers consider ESG a primary factor in decision-making.

On the flip side, more than one-fifth (22%) of millennials say ESG is a primary consideration. But this generation is becoming concerned about the financial performance of ESG investments in the face of the increasing cost of living.

Michelmores found that whether a venture will have a positive social or environmental impact is 63% less important to millennials now than in 2019. Factors such as risk, management fees and liquidity have all taken precedence among millennial investors.

These concerns are shared across generations. 52% of respondents said that, in 2023, they would only choose to invest in assets with strong sustainability credentials if the return is equal or higher than other investments.

The good news is that this is usually the case. 89% of respondents who knew the sustainability credentials of their portfolio(s) said that their ‘sustainable’ investments always, often or occasionally generate equal or better returns than their other investments.

Yet, half of those surveyed said that one-fifth or less of their portfolio was allocated to ‘sustainable’ investments. Baby boomers and Gen X accounted for most of this cohort.

Michelmores has concluded that there is an opportunity for sustainable investing to “come of age” as millennials and younger generations inherit wealth, as they are more prone to be ESG-minded and to recognise the opportunities of sustainable investments.

Jonathan Kitchin, partner at Michelmores, said: “As millennials become wealthier and inherit money from the baby boomer generation, there’s a real opportunity for sustainable investing to come of age and be a deciding factor in investment choices. Financial advisors will play a key role in educating their clients and ensuring that impact investment regularly features as part of the conversation.”

Kitchin noted that changing regulations on financial disclosures will likely coincide with the increasing investment power of millennial investors, thus giving them a clearer picture of the ESG credentials of their investments. Around one-third (36%) of those surveyed for this piece of research did not know the ESG credentials of their portfolio(s).

Join the sustainable finance debate at edie 23 on 1-2 March

Taking place in London on 1-2 March 2023, edie’s biggest annual event has undergone a major revamp to become edie 23, with a new name, new venue, multiple new content streams and myriad innovative event features and networking opportunities.

edie 23 will take place at the state-of-the-art 133 Houndsditch conference venue in central London. Held over two floors, the event will offer up two full days of keynotes, panels, best-practice case studies and audience-led discussions across three themed stages – Strategy, Net-Zero and Action.

We have several great sessions planned on the topic of sustainable finance, including a keynote address from the Green Finance Institute’s programme director Ryan Jude and Temasek’s chief executive Dr Steve Howard. 

Click here for full information and to book your ticket.