The fifth impact investing survey by global asset manager, American Century Investments revealed that the appeal of impact investing has reached all-time highs.
Respondents were surveyed at the end of 2021 in the US, UK, Germany and Austrialia.
Sarah Bratton Hughes, senior vice president and head of ESG and sustainable investing for American Century Investments said: “We see a rising demand for impact investing across geography, generation and gender, along with favourable economics and a supportive political and regulatory environment that will drive changes and advances in sustainable investing over the coming year.”
The appeal of impact investing has grown in the UK more than any other country surveyed, rising to 63% (more than three-in-five), up from 48% in 2020.
In the US, 61% of respondents found impact investing appealing, up from 51% in 2020, while the appeal in Germany increased from 35% in 2020 to 44% in 2021.
US appeal of impact investing – net appeal growth since 2016
In its 2022 environmental, social and governance (ESG) outlook, American Century identified those top concerns among those surveyed, as well as empowerment (labor) and sustainable living (food crisis) and digitization (cyber), as areas that would dominate the ESG space over the short-and-long-term.
“These important themes shape our research agenda, engagement and proxy voting activities to not only contribute to transforming society but doing so while striving to deliver superior, long-term, risk-adjusted returns,” said Bratton Hughes.
Greenwashing concerns endure
According to the survey, concerns about greenwashing continue, with half or more of respondents in the UK (58%), US (50%), Germany (50%) and Australia (51%) believing greenwashing has increased.
Despite this, less than half of respondents in the US (44%), UK (39%), Germany (38%) and Australia (39%) reported greenwashing influenced their interest in impact investing.
Bratton Hughes continued: “We expect greenwashing not only to remain a concern, but to expand beyond environmental or climate claims to claims related to all Sustainable Development Goals.
“The combination of regulatory pressure, investor demand and industry cooperation will help drive clarity, consistency and transparency across the sustainable investing space.”
Sustainable investing as an alpha generator
Another finding was that a significant share of people are willing to sacrifice returns for a positive impact.
In the UK 39% of respondents reported a willingness to sacrifice returns for a positive impact, followed closely by respondents in the US at 38%.
Interestingly, half of US millennials are willing to sacrifice returns for a positive impact, with similar numbers in the UK (49%) and Australia (45%).
“In our view, this trade off isn’t necessary and isn’t the future of sustainable investing,” she said. Sustainable investing is more than just a risk mitigator, we believe it’s also an alpha generator.
“This is alpha plus: sustainable and impact strategies have the potential to provide market-beating returns coupled with societal and environmental alpha.
“We expect this alpha plus approach to appeal to the majority of people who are either unsure or unwilling to sacrifice returns for a positive impact,” Bratton Hughes finished.
