Study finds investors will give up gains for sustainable options

Cambridge project finds consumers willing to vote with their cash against funds that are poor on sustainability

Investors are prepared to sacrifice gains for investment choices that are sustainable socially and environmentally, a new study has found

Investors are prepared to sacrifice gains for investment choices that are sustainable socially and environmentally, a new study has found

 

Investors are prepared to sacrifice gains for investment choices that are sustainable socially and environmentally, a new study has found.

The study by the University of Cambridge Institute for Sustainability Leadership in co-operation with the Investment Leaders Group found that there was a strong preference for sustainable investing among consumers even when returns were 2 per cent or 3 per cent lower than they would otherwise be.

Instead of asking people for their opinion, the study observed how they behaved in practice when making fund choices.

A 2,000-strong sample of US investors was analysed to see how their decision-making was affected by the presence of environmental and social information on fund fact sheets alongside traditional financial data.

“The study shows that people want more from their capital than returns,” said Dr Jake Reynolds, executive director of sustainable economy and the Cambridge University group. “Given the right information they will avoid investments that harm people or the environment. In the real world most savers are not provided with that information meaning they are unable to make positive choices.

“Given what we know about climate change, destruction of nature and high levels of inequality – that needs to change.”

The study found that participants in the under-35 age range had a stronger preference for sustainable investment, while income, gender and education had no significant effect on choices.

The authors said it also showed there was stronger preference for avoiding funds rated poorly for sustainability than for actively choosing funds with high sustainability.