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Disconnect between investors’ beliefs and actions

19 April 2021

Just one in six (15%) investors are using their investments to support a sustainable environment, despite over three quarters of people acknowledging climate change as an important risk to consider when choosing where to put their money, suggesting a disconnect between ideas and practice, according to a survey by Aegon UK.

The survey found people were much more likely to carry out environmentally-friendly practices during their day-to-day activities, such as recycling (95%), avoiding single-use plastics (59%) and buying local produce (49%) than to invest in a socially responsible way.

However, 77% agreed that climate change is an important risk to consider when investing, suggesting a disconnect between people’s beliefs and the way they approach their investments.

Despite a 66% rise in ESG fund investment in the UK year-on-year, half of investors said they would like more information to help them understand ESG investing, while 43% would like to see clear labelling. Nearly two-fifths (39%) called for more ESG investment choice and 45% would like better articulation of the benefits and impact.

Tim Orton, managing director of investment solutions, Aegon UK, said: “It’s clear few people understand what is meant by ESG investing and that’s not surprising given that within the investment industry there are debates about what it constitutes. At the moment, it’s the more tangible day-to-day acts like recycling and avoiding single use plastic that people think of when considering how they’re contributing to a more sustainable planet.

‘But the reality is many people will now have a proportion of their pension in ESG strategies – although they may not be aware that this is the case. Workplace scheme default funds like Aegon’s, which are used by 95% of defined contribution scheme members, are increasingly integrating ESG considerations into their investment processes. The industry has a role to play in communicating how ESG investing works and to spell out the benefits of investing in this way.”

Aegon has committed to net zero emissions by 2050 across its default funds and said it has already added significant allocations of customers’ savings to ESG investments in its workplace default pension funds.

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