In our previous blogs, we saw how ESG plays a crucial role in impacting consumers’ purchase decisions and business’ organizational operations. This has led sustainable investment to experience considerable market momentum of late, playing an important role in investment decisions. With an increased focus on ESG from both consumers and investors, there is no doubt why ESG is the trending topic of discussion in the majority of corporate boardrooms, so to better understand its true impact, we spoke with 300 investors from the Financial Services, Technology, and Healthcare industries.
While over a quarter (26%) of brokers/investment advisors indicate that financial factors will always be important for their client’s investment decisions, that doesn’t mean that ESG won’t play heavily into investment decisions.
According to 40% of brokers/investment advisors, ESG is now more important to the investment decision-making process than financial factors. ESG continues to be important for clients when it comes to their investment decisions, with 22% of brokers/investment advisors reporting likewise. In addition, 24% of brokers/investment advisors report that ESG’s impact on their clients’ investment decisions will continue to increase over the next 2 years.
These reports lead us to question: is the importance of ESG perceived the same way across all industries?
Our detailed analysis uncovered that the importance of ESG is higher for investors involved with the healthcare industries than it is for those working with the Financial Services and Technology industries.
The importance of ESG in Financial Services Industries
As expected, brokers/investment advisors highly involved with financial services industries consider ESG in their investment decisions. 41% of these broker/investment advisors report that ESG factors are more important than financial factors. Looking ahead, almost a quarter of financial services brokers/investment advisors feel that ESG’s impact will increase in the next 2 years, while 21% of the brokers/investment advisors surveyed state that ESG will always be more important than financial factors.
The importance of ESG in Technology Industries
When it comes to the current position of ESG factors over financial factors, brokers/investment advisors with exposure to Tech industries report ESG having the least importance compared to other industries. Just under a quarter of these brokers/investment advisors report the same; 1.37x less than the average rating of ESG factors over financial factors. Surprisingly, 30% of Tech brokers/investment advisors report that they feel the importance of ESG will increase in the next 2 years compared to other industries, however, it appears that Tech brokers/investment advisors do not see the long-term importance of ESG for their investment; only 14% reporting ESG as an evergreen factor in their investment decisions.
The importance of ESG in Healthcare industries
Compared to brokers/investment advisors in other industries, those working with healthcare industries report ESG factors having higher importance than financial factors. Currently, over half report that ESG factors are more important than financial factors for their investment decisions. While only 17% of healthcare brokers/investment advisors feel that ESG will be more important in the next 2 years, they are 1.4x more likely to report that ESG factors will be always important for their investment decisions.