Schroders Global Investor Study 2020: Millennials are more likely to compromise their personal beliefs if the return is high enough

Millennials[1] are more likely to compromise their personal beliefs in order to benefit from potentially higher returns, Schroders Global Investor Study 2020* has found.

This study of more than 23,000 people who invest from 32 locations globally, revealed that a quarter of millennials, who are often perceived to be more sustainability conscious, would compromise their personal beliefs if the returns were high enough.

Reassuringly though, in total, 77% would not invest against their personal beliefs, and for those who would, the average return on their investment would need to be 21% to adequately offset any guilt.

According to demographics, some 16% of those aged 71+, 20% of baby-boomers and 24% of those classed as Generation X would swap their personal beliefs for higher returns. 

Almost a third (29%) of those who class themselves as having ‘expert/advanced’ investment knowledge are substantially more likely to trade their personal beliefs for better investment returns. compared with 18% of ‘beginner/rudimentary’ investors.

Geographically, people in China, Italy and Portugal are the most likely to stay true to their views, with the least probable being those based in the US, Singapore and Thailand.

Overall, 42% of investors globally did state that investing sustainably was likely to lead to higher returns. Some 47% said they were attracted to investing sustainably due to its wider environmental impact.

Expert or advanced investors are the most likely to think sustainable investments have the most potential to offer higher returns (44%) and the least likely to think investing this way will ultimately disappoint (9%).

Carolina Minio-Paluello, Schroders’ Global Head of Product, Solutions & Quant, commented:

“It is exceptionally positive to see that many investors today believe that investing sustainably does not have to come at the expense of performance. People want their values reflected in the way they invest.

“It is our experience that investment performance and sustainable returns should not be mutually exclusive. The evidence is increasingly clear that investing sustainably can lead to better long-term outcomes. Communication is therefore key; investors need to understand what investing sustainably really means and entails. This is a core focus for Schroders; working closely with our clients to ensure we are meeting their sustainable investment needs and objectives.”

Hannah Simons, Head of Sustainability Strategy, Schroders, said:

“Sustainable investing often means different things to different people, their personal beliefs are often a key part of how this. For some, this may entail putting a greater investment emphasis on companies that place environmental issues at the top of their corporate agendas for others they may seek divestment from fossil fuel producers.

“Our focus as an asset manager is to help our clients better navigate the increasingly complex sustainable investment space. Our aim is to deliver not only returns for investors, but better outcomes for society as a whole, with the measurement and tracking of progress remaining critical.”

Indeed, communication is key, with 93% of respondents requiring more information to reassure them of the sustainability of their investments.

Views were split among investors in terms of where this information should come from, with 34% of people stating that it was the responsibility of independent third parties and 33% wanting the clarity to come from the investment provider directly.

Surprisingly, just 44% of European respondents said they invest in sustainable investment funds, as opposed to funds that don’t consider sustainability factors. This lags investors in the Americas (52%) and Asia (49%) and comes despite the common consensus being that European investors are generally ahead of the pack globally when it comes to embracing sustainable investing.

Opinion was split among investors in terms of how asset managers should address challenges that arise from the fossil fuel industry. Just over a third (36%) said managers should withdraw investment from companies in these industries to limit their ability to grow. However, over a quarter (27%) said managers should remain invested to drive change.

Furthermore, investors said that the top three ‘behaviours’ companies should be most focused on were their social responsibility, attention to environmental issues and the treatment of their staff.  

To find out more about Schroders Global Investor Study 2020 and read the full report, please click here.

 *In April 2020, Schroders commissioned an independent online survey of over 23,000 people who invest from 32 locations around the globe. This spanned countries across Europe, Asia, the Americas and more. This research defines people 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.