09. Sep 2019 Sustainability

Investors increasingly march to the sustainability beat – in their investments and their daily lives

An increasing number of investors are following their convictions and allocating to sustainable financial products with high environmental, social and governance (ESG) ratings. A DWS survey of almost 1000 people reveals the shift to ESG products.

  • Around one in three DWS.de readers already invest in sustainable financial products.
  • Investors are also developing more sustainable lifestyles.
  • By taking this consumer behaviour on board, companies can help to improve their public image.
4 minutes to read

Almost one in three investors state that they already invest in ESG financial products.

Sustainable investment is increasingly popular with private investors. The bedrock for this trend towards ESG[1] financial products looks to be investors’ increasingly sustainable lifestyles. That’s the conclusion of a DWS.de online survey on the topic.

To the poll "Are you a sustainability pro?"

Around a third (33%) of survey participants replied "yes" when asked if they already invest in sustainable investments such as ESG funds.

“The fact that a third of people are already making this choice shows us that gradually expanding our range of ESG financial products is the right thing to do,” says Ferdinand Haas, Head of Product for Europe and Asia at DWS. “Institutional investors are leading the way, and private investors are now following.”

Increasing demand from private investors for ESG products

The trend towards ESG products among private investors is gathering pace. In its most recent financial report for 2018, Eurosif, the leading industry forum for sustainable investments in Europe, reported that more than 30 percent of all sustainable financial products are now held by private investors. This compares with 22 percent in 2016 and just 3.4 percent in 2014.[2]

When asked what was most important to them in opting for a sustainable investment product, almost a third (30%) of DWS.de users replied "responsible production". Around a quarter (26%) chose an ESG product if it promised "climate protection". "Cleaner water", "social factors" and "health" motivated around ten percent of decisions to invest sustainably.

ESG investments seldom mean lower returns

One thing stands out: 42 percent of investors answered “yes” when asked if they might accept lower returns on ESG funds compared to traditional products. A further 30 percent answered “maybe”.

“Firstly, this shows how committed many investors are to choosing ESG financial products,” says Petra Pflaum, CIO for responsible investments at DWS. “However, the idea that investors must decide whether to accept allegedly lower returns on sustainable investments is generally unfounded, as more and more studies show.”

The index provider MSCI recently looked into this issue too and came to the following conclusion: companies with good sustainability ratings are more profitable and in certain regions may even achieve higher dividends.[3] An ESG rating that has improved over a number of years often results in companies performing better[4] than the wider stock market.[5]

To the article "MSCI investigates: What are the real advantages of sustainable investing?"

By investing in ESG funds, investors can generally achieve higher returns.

Trend towards sustainable living

That more investors are investing sustainably is due in no small part to increasingly sustainable lifestyles. When asked if they had already tried to reduce their carbon footprint because of the climate change debate, 29 percent replied: “Yes, I travel by bike more often.” Twenty-four percent stated that they fly less often, 22 percent use public transport more often and two percent of DWS.de readers have bought an electric car.

More and more consumer goods manufacturers are also promoting products manufactured in a sustainable way. This means minimising energy consumption and use of raw materials in manufacturing but also treating employees fairly. In the survey, 57 percent of people said they prefer to consume such sustainable products. In addition, 82 percent stated that they have already invested in insulation or energy-saving electrical devices or that they use green electricity.

“The more consumers introduce sustainability into their everyday lives, the more these companies benefit both financially and in terms of their public image,” says Pflaum. “If consumers invest in the companies from which they buy products, their sustainable purchasing behaviour will also have a positive impact on their investments.”

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1. ESG stands for the three sustainability areas “Environmental”, Social” and “Governance”.

2. http://www.eurosif.org/eurosif-2018-sri-study-launch-event/

3. MSCI, „MSCI Emerging Markets ESG Leaders“, as of: July 2019, https://www.msci.com/documents/10199/c341baf6-e515-4015-af5e-c1d864cae53e

4. Outperforming means that the return on a equity is better than a comparable index.

5. MSCI, "How Markets Price ESG", as of: November 2018, https://www.msci.com/documents/10199/f3f252a7-0dbd-035b-e67c-964a87fbc

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