Schroders Global Investor Study 2019: Hong Kong investors' sustainable investment ambitions fail to reflect their actions

The proportion of Hong Kong investors who are investing sustainably is significantly lagging behind those who expressed interest and would like to invest, indicating that a gap exists between investors’ intentions and their tangible actions, the Schroders Global Investor Study 2019 has found.

The survey of over 25,000 investors around the world, including 500 of them from Hong Kong, has found that 53% of Hong Kong investors said they would always consider sustainable factors when selecting an investment product, and that 52% think individuals like them can significantly contribute to a more sustainable world by choosing sustainable investment products. However, the same study found that only 13% of Hong Kong investors already invest sustainably.

In comparison, 66% of Asian investors and 57% of investors globally said they would always consider sustainable factors when selecting an investment product, and that 63% and 60% of them, respectively, believe they can significantly contribute to a more sustainable world by choosing sustainable investment products. But like their Hong Kong peers, adoption rate is low, with only 17% of Asian investors and 16% of investors globally already invest sustainably.

Hong Kong investors who identify themselves as being expert/advanced investors (23%) were more likely to invest sustainably, compared to those who consider themselves intermediate (10%) and beginner/rudimentary (6%) investors.

Investing sustainably also ranked mid-table in terms of overall financial priorities. Investors in Hong Kong instead cited the need to generating an expected level of income, meeting total return expectations, avoid losing money and reasonable fees as more important factors.

The three key factors that motivate Hong Kong investors to invest more sustainably include changes to regulations encouraging them to invest more in sustainable investments, a rating from an independent body confirming a genuinely sustainable approach, and should financial advisers provide more, easy to understand information.

Amy Cho, Chief Executive Officer, Hong Kong and Head of Intermediary Clients, Asia Pacific, Schroders, commented:

“Attitudes towards sustainable investing are changing, Asian investors including those in Hong Kong are increasingly aware of ESG matters such as climate change and how their investment decisions can contribute to a more sustainable world. However, Hong Kong investors are still slightly behind their global counterparts in recognising the necessity of sustainable investments. It is evident that there is still room for improvements in bridging awareness with action.

“To lead this change, we believe that engagement and education are necessary to help Hong Kong investors to clear their misconceptions, understand the benefits behind sustainable investments, and how they can do it.

“We are having deeper conversations with our fund distribution partners and offering them training assistance to help enhance awareness and knowhow on the sustainability topic, so that they may in turn, put that to use to support investors.”

Jessica Ground, Global Head of Stewardship, Schroders, commented:

“There remains a gulf between people’s sustainable investment aspirations and the reality of how they prioritise these factors in their investment decision-making. A significant proportion of investors clearly believe that sustainable investing is important, but this is yet to translate into tangible action for the majority. This will unfortunately leave investors vulnerable to the global impacts caused by the issues such as climate change. It is important that asset managers and the broader industry – including the likes of policymakers globally – work with investors to ensure they can better identify the benefits of investing sustainably and, in turn, are able to access funds which will enable them to do so.”

Generation X vs Millennials

The study also found ‘Generation X’ Hong Kong investors are more motivated to invest sustainably than other age groups, in contrast to the common consensus that ‘millennials’ are driving sustainable investing efforts.

Instead, 63% of Hong Kong’s Generation X (38-50 years old) said they always consider sustainability factors when selecting an investment product, compared to 49% of millennials (18-37 years old) and 48% of baby boomers (51-70 years old).

Generation X were also the most likely to feel that their individual investments could have a direct impact in contributing to a more sustainable world (58%) – again a proportion greater than millennials (53%) and also baby-boomers (37%).

Perhaps, most emphatically, almost two-thirds of Generation X investors (63%) agreed that all investment funds should consider sustainability factors and not just those designed as ‘sustainable investment funds’, ahead of baby-boomers (59%) and millennials (51%).

*In April 2019, Schroders commissioned Research Plus Ltd to conduct an independent online survey of 25,743 people who invest from around the globe. This research defines “investors” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last 10 years.