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Do Investors use ESG?

Updated: May 30, 2023

Environmental, Social, and Governance (ESG) investing is rapidly gaining traction in the investment community. It is an investment approach that takes into account a company's environmental and social impact and governance structure when making investment decisions. The goal of ESG investing is to achieve not only financial returns but also positive societal and environmental outcomes. This study aims to examine the level of awareness and use of ESG investing among investors.

This survey was conducted among 58 investors of different ages, gender, and income levels. The survey was conducted online using Google Forms, and consisted of multiple-choice questions.

The survey found that 84% of respondents were aware of ESG investing, and took it into account when making decisions on where to invest. Governance was the most popular out of the three sectors and had 85% of investors considering it. Most investors (54%) use ESG metrics on a case-by-case basis, and primarily for the private equity asset class.

The primary reasons cited by respondents for investing in ESG funds were to help manage investment risks (52%), as a proxy for management quality (52%), and because clients demand it (41%). A majority of investors (64%) used reports and statements from the company to inform their decisions and used third party research to identify ESG issues.

When asked about the challenges to ESG investing, respondents cited the inability to integrate ESG into their quantitative models (56%), a lack of information/ data (44%), and a lack of demand from clients (33%). When asked what would encourage them to integrate ESG into their decision-making process, many (78%) responded that a proven link between ESG and financial performance

A majority of firms also provided training on how to use ESG when making decisions (47%), with much of the training being sourced from miscellaneous resources like research papers, books and case studies. 57% of investors agreed that live, in person structured training would be the most efficient method of learning.

The survey results indicate that ESG investing is gaining popularity among investors. The majority of respondents were aware of ESG investing and had integrated it into their decision-making process. However, the survey also highlights some challenges to ESG investing, including the lack of clear standards and metrics for measuring ESG performance, the perception that ESG investing means sacrificing financial returns, and the lack of knowledge on how to integrate ESG. Addressing these challenges will be critical to the continued growth and success of ESG investing.

Overall, the survey results suggest that ESG investing is here to stay and will likely become even more popular in the future. As investors become increasingly aware of the impact of their investments on the environment and society, ESG investing is likely to play an increasingly important role in their investment decisions.

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