Nuveen, the $1.2 trillion AUM investment manager of TIAA, announced the release of its annual Responsible Investing Survey, exploring investors’ views, activities and advisor engagement around responsible investing. The survey findings indicated a significant increase in awareness and interest in ESG investing, and suggested that increased information on the environmental and social impact of responsible investing would drive further action to shift to ESG strategies.
For the study, Nuveen surveyed over 1,000 U.S.-based investors in an online poll, with over $100,000 in investible assets, and currently working with a financial advisor.
The survey found growing interest and activity in responsible investing (RI), with 57% of respondents reporting being very or somewhat familiar with RI, and 53% currently participating in RI, up from 44% in the 2019 survey. Allocations are expected to continue growing, according to the survey, with 29% of respondents expecting to have RI make up a greater than 50% of their portfolios in five years, compared to 19% today, and only 18% expecting a 0% allocation, compared with 31% currently.
Participation rates in RI varied significantly by age group, with 76% of Millennials reporting that they are ESG investors, compared to 65% of Gen-X respondents and less than a quarter of Baby Boomers.
As interest in ESG investing grows, the survey examined the drivers and key factors investors consider when allocating to RI strategies. The most commonly cited reason for investor participation in RI was improved investment performance, reported by 53%. Among investors currently participating in ESG investing, the vast majority, nearly 90%, reported earning same or better returns than the market. Other reasons cited for participation in RI included suggestions from financial advisors (50%), better risk management (40%), and alignment with values (34%).
Amy O’Brien, Global Head of Responsible Investing at Nuveen, said:
“Evidence continues to grow that investors are not at all sacrificing performance when they invest with concern for urgent societal and environmental factors. In fact, ESG-focused management is all about strengthening a company’s viability and sustainability for the long-term, with a measurable impact on fundamental performance.”
Investor action also appears to be driven by awareness of environmental and social issues, according to the Nuveen survey, with 29% of investors reporting that concern about climate risk have led them to talk to their advisers about investments in low carbon solutions, and 58% saying that they would be more interested in shifting to an investment strategy if it had only investments with net zero carbon emissions. On the social front 25% of respondents said that they have changed how they invest as a result of their concern about diversity and inclusion.
The survey found that increased information would likely drive more participation in ESG investing. More than half of investors not currently participating in RI said that knowing the carbon emissions generated by their investments would help them make more RI choices. Nearly 60% of investors said that it is hard for them to see the specific social or environmental benefits of their investing, and 73% of these said that they would invest more in RI if these benefits were easier to see.
Awareness and knowledge of ESG investing appears to be increasingly important for advisors. 80% of respondents agreed that advisors who discuss responsible investing with investors are more forward thinking, and 79% reported that they would be much more loyal to an advisor who actively helps them invest in a way that has a more positive impact on the world. 82% of investors said that they would use advice from their advisors to decide on the allocation of RI in their portfolios.
“Our survey suggests that financial advisors are important ‘gatekeepers’ into the world of ESG investing and have a powerful role to play both in introducing investors to the sector and stimulating further market growth. There are compelling benefits for advisors as well: Investors tell us that support for the approach strongly sustains their loyalty to an advisor.”
Click here to access the Nuveen survey results.