优蜜传媒

WASHINGTON, D.C. -- U.S. investors are receptive to taking personal values into account when making stock purchases, but this is not their highest priority when investing and not something the majority spend much time focused on before making stock buys. Close to half express interest in sustainable investing, but only one in four say they have heard much about it.

These are the broad findings of a recent 优蜜传媒study focused on sustainable investing, also known as "responsible investing," "social impact investing" or "environmental, social and governance" (ESG) investing. For this survey, adults with $10,000 or more invested in stocks, bonds or mutual funds were interviewed by web, Nov. 1-7, using the 优蜜传媒Panel.

Nearly Half Interested in ESG While Familiarity Remains Low

优蜜传媒has measured investors' familiarity with the concept of sustainable investing several times since early 2020, defining it as a type of investing that involves "choosing investments based on the effect they have on things like the environment, human rights, diversity and other social values, in addition to investment returns."

Currently, 25% of investors, similar to past readings, say they have heard a lot or fair amount about sustainable investing. Ten percent, also consistent with prior measures, say they are currently invested in such funds.

At the same time, after reading the survey's description of sustainable investing, 48% of investors say they are very or somewhat interested in purchasing sustainable investing funds. This is statistically unchanged from the 42% to 46% readings taken during the pandemic. Interest was slightly higher, at 52%, in February 2020.

Although relatively few investors are familiar with sustainable investing funds or have already purchased them, their potential willingness to do so is highlighted in a separate question of employed investors.

• Seven in 10 investors who are employed full or part time say they would definitely (13%) or probably (57%) include sustainable investing funds as part of their 401(k) if their employer's plan were to offer them.
• Most of the remaining three in 10 investors say they would probably not include them in their portfolio (25%), while 5% say they would definitely not do so.

Investors Prioritize Investment Performance Over ESG Factors

The poll also measured investors' attention to each aspect of ESG investing -- asking investors how much they research or think about a company's performance on environmental, social and corporate governance matters -- along with their attention to a stock's potential earnings and risk.

The potentials for profit and loss emerge as investors' main concerns when choosing stock. Seventy-eight percent of investors say they give a lot or fair amount of thought to the expected rate of return when choosing which companies or funds to invest in, and 74% give the same thought to the risk for potential losses.

ESG considerations are secondary, with about half as many investors investigating these factors upfront. Roughly four in 10 say they look into corporate governance policies (41%) or the social values advocated by company leadership (38%) before buying. Slightly fewer (35%) research the environmental record or impact of a company.

	A lot	A fair amount	Total
	%	%	%
Expected rate of return	31	47	78
Risk for potential losses	31	43	74
Corporate governance policies (board of directors, executive pay, business ethics, etc.)	11	30	41
Social values advocated by company leadership	13	25	38
Environmental record or impact of the companies	12	23	35
Nov. 1-7, 2021; U.S. investors are adults with $10,000 or more invested in stocks, bonds or mutual funds
Gallup

Further, most investors don't spend a lot of time thinking about or looking into any of these aspects of a company or fund before they invest. Less than a third say they do a lot of research on the expected rate of return or risk for potential losses, while no more than 13% of investors say they do a lot of research on any of the ESG factors.

Female investors are slightly more likely than male investors, 42% versus 35%, to say they give a lot or fair amount of thought, overall, to the social values of companies they invest in. But women are no more likely than men to look into the environmental impact of companies, their corporate governance, their expected rate of return or their risk for potential losses.

High Potential for Investors to Express Values Through Investing

The survey also explored investors' likelihood of taking each of five different actions in order to advance their values, testing how investing compares with other approaches available to people.

• Investors are most likely to report that they incorporate behaviors in their daily life as a way to support the values and causes they believe in -- 91% do this.
• Most (78%) also report donating money to causes or organizations.

Although making stock decisions based on one's values is not the most compelling to investors, it does resonate with the majority of them.

• Sixty-three percent say they are likely to purchase stocks or funds associated with companies that align with their values.
• Slightly more, 68%, are likely to avoid stocks or funds associated with companies that contradict their values.
• Sixty-one percent are likely to support their values by volunteering for causes or organizations, on par with those likely to express their values through stock selections.

	Very likely	Somewhat likely	Total
	%	%	%
Incorporate behaviors in your daily life that express your values	49	42	91
Donate money to causes or organizations	36	42	78
Avoid stocks or funds that are invested in companies that contradict your values	28	40	68
Purchase stocks or funds invested in companies that are aligned with your values	21	42	63
Volunteer for causes or organizations	24	37	61
Nov. 1-7, 2022; U.S. investors are adults with $10,000 or more invested in stocks, bonds or mutual funds
Gallup

Investors' likelihood of purchasing stocks based on a company's alignment with their own values is similar by age and income level but differs by gender.

• By 71% to 59%, female investors are more likely than male investors to say they are very or somewhat likely to purchase stocks or funds invested in companies aligned with their values.
• The gender gap is narrower in terms of avoiding stocks that contradict one's values: 72% of female investors say they are likely to do this, versus 65% of male investors.

Additionally, investors who identify as Democrats (74%), are more likely than Republicans (60%) or independents (57%) to see themselves choosing stocks based on whether the companies are in sync with their values.

Values Not Nothing, but Not Everything, to Investors

The poll also looked at the intersection of investing and values by asking investors how much importance they attach to each of seven different money-related principles. Two of these relate to the importance of values when investing.

The most important of these seven principles to investors have to do with being financially responsible:

• More than nine in 10 investors (92%) describe "not spending more than you earn" as extremely or very important to them.
• This is followed by "putting money away for a rainy day" and "earning and saving as much as possible to achieve financial freedom," each rated important by 83%.

Making sure investments concur with one's personal values rates as less important:

• Importance drops to 50% for "requiring that companies you invest in are aligned with your values." This ties with "providing financial help to family members in need."
• "Requiring that companies you invest in have a positive societal impact" is important to 41% of investors, on par with "donating a percentage of income to help others" (40%).

In other words, requiring one's investments to match their values or using them to achieve societal goals are important to a segment of investors, but they do not rise to the level of universal beliefs that investors hold about handling their money.

	Extremely important	Very important	Total
	%	%	%
Not spending more than you earn	65	27	92
Putting money away for a rainy day	44	39	83
Earning and saving as much as possible to achieve financial freedom	40	43	83
Requiring that companies you invest in are aligned with your values	19	31	50
Providing financial help to family members in need	16	34	50
Requiring that companies you invest in have a positive societal impact	16	25	41
Donating or spending a percentage of your income to help others	17	23	40
Nov. 1-7, 2021; U.S. investors are adults with $10,000 or more invested in stocks, bonds or mutual funds
Gallup

The gap between prioritizing one's financial security and promoting their values is even wider on the basis of investors' rating of each goal as "extremely important." This ranges from 65% for not spending more than you earn and 44% for saving for an emergency to 19% for requiring that companies you invest in are aligned with your values and 16% for requiring that companies you invest in have a positive societal impact.

Bottom Line

Investors are receptive to the idea of using their investments to promote their values, either by choosing stocks that align with those tenets or avoiding stocks that contradict them. Whether they engage in this type of investing may partly depend on what else they're doing.

Someone concerned about global warming may already drive an electric car, have installed solar panels on their home, be consuming less meat or taking other steps known to reduce the use of fossil fuels. They may also donate financially to environmental advocacy groups. For some, researching and potentially reallocating their investments may be the logical next step. For others, it may be too challenging a task, or not as high a priority as ensuring that their portfolio is designed for strong growth.

The results suggest that to get investors off the dime, some external force may need to nudge them to act on their underlying interest in using investments to support or promote their values. Previous 优蜜传媒research suggests investors aren't hearing much about sustainable investing funds from their financial adviser. Should that change in the future, or should more employers begin to offer sustainable investing funds as part of their retirement plan options, a large segment of investors are primed to buy in.

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