More than half of UK investors put returns ahead of ESG

According to Charles Schwab, the number of UK investors preferring ESG problems has decreased over the last two years, with more than half now prioritising pure financial returns over sustainability.

According to a poll of 1,000 UK investors, 47% prioritise sustainability over increasing earnings, down from 55% in 2021.

Meanwhile, the share of new investments that consider ESG declined from 44% in 2021 to 38% in 2023.

Richard Flynn, managing director of Charles Schwab UK, said: "With the need to maximise returns seemingly growing in importance amid the cost-of-living crisis, fewer investors seem to be factoring in ESG-related considerations into their investment decisions.”

Another concern was the higher costs that are sometimes linked with long-term investments. Investors' willingness to pay additional fees for sustainable investments fell from 58% in 2021 to 50% in 2023.

According to the survey, investors are growing less confident that sustainability makes for better investments. In 2021, 75% thought companies with high ESG credentials were appealing investment alternatives; by 2023, that figure had declined to 68%.

Only 65% of investors felt ESG funds provided greater returns, a decrease from 71% in 2021.

The attraction of long-term investing differs between generations. Millennials (49%), followed by Gen Z (50%), are the most likely to consider ESG factors in their investments.

Baby boomers and Generation X are the least likely to consider sustainable investments, with 23% and 32% considering ESG concerns, respectively.

Flynn added: "It will be interesting to see how any economic rebound and reduction in inflation impacts this attitude in the coming years."

By fLEXI tEAM