- North America now leads the world in ESG adoption; No longer a phenomenon driven primarily by millennials, women, wealthy and European investors, global demand for ESG investments is accelerating among mainstream of investors.
- Investors’ top reason for investing in ESG is to help support the environment; Nearly as many see it opening up new investment opportunities as concerns about performance trade-off fades.
- Most investors believe that solutions to climate change and social problems is not up to government alone. Companies and private capital seen as crucial to sustainability and accountability.
- Half (49%) of investors now asking for ESG to be integrated in the investment analysis process; Lack of knowledge about ESG strategies is biggest roadblock to broader adoption.
The Natixis IM survey, published today as world leaders are gathered in Glasgow for the climate change conference COP261 found:
- 77% of respondents believe it’s their responsibility as investors to hold companies accountable for their impact on society including climate change and inequality
- 82% of investors say that companies have a responsibility to address social issues, even more than those who say it’s the government’s responsibility (78%)
- 45% consider it important to invest in companies that are transitioning to more sustainable business models
- 67% would be more inclined to invest in funds that demonstrate a better carbon footprint, a key factor in reducing climate change
“As ESG becomes more widely adopted and investors learn more about the different kinds of ESG investments, interest in ESG investing is growing rapidly, reinforced by positive returns from these strategies,” said Nathalie Wallace, Global Head of Sustainable Investing, Natixis Investment Managers. “With governments, nongovernmental organizations and private companies all showing increased commitment to ESG goals, these strategies can enable investors to pursue superior environmental and social outcomes and the financial performance they expect.”
The Natixis IM findings not only show greater interest in ESG, but also dispel a number of myths around its adoption, including:
- Interest in ESG isn’t limited to millennials: The conventional wisdom is that ESG adoption has been driven by socially conscious millennials who want their assets to drive environmental, social and ethical change. While ESG investors do skew younger, broad adoption and interest suggests ESG now appeals to the mainstream of investors. One in four (27%) millennials say they are invested in ESG, but so do 20% of those in Generation X and 18% of baby boomers. Moreover, interest in ESG is high across all age segments, including 52% of millennials, 52% of Generation X and 44% of baby boomers.
- While Europe has led the way in early ESG adoption, the world is catching up: North American investors in ESG (28%) now lead those from Europe (22%) and Asia (22%) in ESG adoption. Within North America, US investors (32%) dominate, compared to only 16% of Canadians who own ESG investments. Current ESG investment is lowest in Latin American countries (13%), but that is likely to change over time as the region has a large number of investors (62%) who say they are interested in ESG even if they have not yet made an investment.
- Doing well is as important as doing good for ESG investor: Given the focus on global warming and sustainability, it is unsurprising that 41% of investors in ESG see it as a way to help support the environment. However, investors are pragmatic in their views. Just as many investors (37%) say ESG opens up new investment opportunities as say they want to “make a better world.” About as many say they think ESG is simply a better way to invest (35%).
- Proof of performance is convincing: Only one in five investors believe that investing in ESG means sacrificing investment performance. Investor sentiment has shifted dramatically since 2017, when Natixis IM found 64% of investor surveyed believe they would need to sacrifice some return potential to have investments that match their personal values. Just 22% say a lack of information on non-financial performance keeps them from investing in ESG.
The Natixis IM survey found that investors are deeply committed to sustainable business goals and practices. A majority (58%) of investors believe they have a responsibility to help solve social issues through their investments. Their commitment extends beyond personal responsibility to fund managers, who they hold to the same standards of active engagement with investments.
The survey found:
- 53% of investors believe the best way to send a message to a company is to sell its stock – 43% of millennials, 38% of generation X, and 29% of baby boomers have sold an investment because of a company’s poor ESG performance.
- More than half (55%) believe fund managers also should sell their shares in companies with poor ESG records.
- 74% expect their fund manager to engage with the companies they’re invested with to influence both ESG and better business practices.
While 59% investors worldwide say their advisor has spoken to them about ESG investments, and 56% say their advisor proactively has asked them about whether are ESG issues that are important to them, engagement is highest with younger investors. A notably higher percentage of millennials (68%) say their advisors has talked with them about ESG, compared to 60% of Gen Xers and 52% of baby boomers.
“Increasingly, individual investors believe the ESG investment decision-making process should involve all of the parties in investing, including financial advisors, fund managers and investors themselves,” said Dave Goodsell, Executive Director, Natixis IM Center for Investor Insight. “This is another example of how mainstream ESG has become in investing, and its potential for becoming among the most critical decision points for investments.”
The inclusion of ESG topics in the 2021 Natixis IM Global Survey of Individual Investors reflects Natixis IM’s strong commitment to growing ESG assets. As part of its 2024 strategic plan, Natixis IM aims to position ESG at the center of its activities, with a target of over €600 billion in assets under management in the sustainable or impact investing category, representing 50% of total assets under management by 2024.
Natixis Investment Managers surveyed 8,550 individual investors from 24 countries, with the goal of understanding their views on the markets and investing. Data were gathered in March and April 2021 by CoreData Research. Each of the 8,550 individual investors had minimum net investable assets of US $100,000 (or Purchase Price Parity [PPP] equivalent).
To view the full report, “Values alignment is only the tip of the iceberg for ESG,” including the methodology related to each survey conducted, a download of the report is available here.
About the Natixis Investment Institute
The Natixis Investment Institute applies Active Thinking® to critical issues shaping the investment landscape. A global effort, the Institute combines expertise in the areas of investor sentiment, macroeconomics, and portfolio construction within Natixis Investment Managers, along with the unique perspectives of our affiliated investment managers and experts outside the greater Natixis organization. Our goal is to fuel a more substantive discussion of issues with a 360° view of markets and insightful analysis of investment trends.
About Natixis Investment Managers
Natixis Investment Managers’ multi-affiliate approach connects clients to the independent thinking and focused expertise of more than 20 active managers. Ranked among the world’s largest asset managers1 with more than $1.4 trillion assets under management2 (€1,182.5 billion), Natixis Investment Managers delivers a diverse range of solutions across asset classes, styles, and vehicles. The firm is dedicated to advancing sustainable finance and developing innovative Environmental, Social, and Governance (ESG) products. Natixis Investment Managers consults and partners with its clients and offers insight on markets and assumptions to better align strategies with long-term goals. Headquartered in Paris and Boston, Natixis Investment Managers is wholly-owned by Natixis. Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Investment Managers’ affiliated investment management firms include AEW; Alliance Entreprendre; AlphaSimplex Group; DNCA Investments;3 Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; Harris Associates; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seeyond; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions and Natixis Advisors, LLC. Not all offerings available in all jurisdictions. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, LLC, a limited purpose broker-dealer and the distributor of various US registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
2 © 2021 Morningstar, Inc. Global Sustainable Fund Flows: Q4 2020 in Review.
1 Cerulli Quantitative Update: Global Markets 2021 ranked Natixis Investment Managers as the 15th largest asset manager in the world based on assets under management as of December 31, 2020.
2 Assets under management (“AUM”) as of June 30, 2021 is $1,402.5 billion. AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Manager. Excluding H2O Asset Management.
3 A brand of DNCA Finance.