Nearly a third of investors are shying away from responsible investment funds despite the sector gaining significant traction of late, due to three main barriers, a FundCalibre investor poll has found.
The poll by the investment ratings company found 68% of investors have already put some money into funds that invest responsibly and 63% are either very likely or likely to do the same in the future.
However, a combination of confusing terminology, a lack of choice and the perception that ESG investing is not mainstream enough presented barriers to the rest of investors.
The findings by FundCalibre also showed that only 8% of respondents would invest with a manager who only targets ‘good’ companies, while 35% prefer fund managers to engage with companies and improve practices and 57% want managers to do both.
However, bad practices by a company would only put off 33% of investors and 62% would decide depending on what the company had actually done.
Meanwhile, social issues were shown to be the lowest in the list of investor priorities, despite fund managers predicting it would be the key focus for investors this year. Instead, environmental issues, followed by good governance were more popular while the most important individual issues cited were climate change, pollution, human rights, corruption and company ethics.
Ryan Lightfoot-Aminoff, senior ESG research analyst at FundCalibre, said: “When it comes to our daily lives, many of us are already making good choices – recycling more, using cars less, consuming less plastic, eating less meat.
“And there has certainly been an uptick in interest from investors in recent years but there is clearly more work to be done by our industry to make ESG investing more accessible to investors and to articulate better what funds are available and what they are trying to do.”
FundCalibre listed three ESG funds it considers to have very clear remits:
• Ninety One Global Environment which only invests in companies that are contributing to the decarbonisation of the world economy;
• Edentree Responsible and Sustainable UK Equity which invests in UK companies that make a positive contribution to society and the environment; and
• BMO Responsible Global Equity, which seeks to avoid unsustainable business practices and invest in companies where there are problems to be resolved.
