Higher returns are driving US adoption of ESG investing says Schroders in its Global Investor Study 2020.

The report says that 55% of Americans are more likely to invest in sustainable funds for their more attractive return profile. The study of more than 23,000 people who invest from 32 locations globally, including 2,000 in the US, also found that only 4% cited they will not invest in sustainable funds due to a perception that they would offer inferior returns – this is down from 27% in 2018.

Sarah Bratton Hughes, Head of Sustainability, North America, Schroders, says:

“Last year marked a turning point where we first saw greater interest in sustainable investing across generations, with Gen X outpacing Millennials. While we have long-believed that systematically integrating sustainable investment principles into our investment process will lead to better long-term risk-adjusted returns, 2020 has proven a turning point that the evidence is increasingly clear that investing sustainably could lead to better long-term outcomes.

Throughout 2020 the COVID-19 pandemic, supply chain disruption, social unrest around inequalities and damage resulting from climate change has proven a company’s ability to manage all their stakeholders is key to their long-term success – we call this trend ‘corporate karma.’”

While climate change is still high on the agenda, social issues, particularly human capital management and the treatment of workers are at the top of American’s concerns regarding corporate behavior. According to the survey results, attention to environmental issues is third likely to drive a company’s performance (7.54), while D&I was last at 7.19 and addressing pay gaps between top execs and other employees (7.25) and then closing the gender pay gap (7.20). On a scale of 1 to 10, with 10 being extremely important, the two key factors that ranked the highest for Americans were social responsibility at 7.69 and treatment of staff at 7.63.