Climate change is a significant concern at the moment, as the UK looks to a post-carbon future. But how does this affect those funding this transition, the taxes they pay and their financial position?
Saltus, a financial planning and investment management firm, have recently conducted a survey into the views of high-net-worth individuals (HNWIs) surrounding the UK economy as a whole, as well as their own personal and financial situation.
All the information was collated into the inaugural Saltus Wealth Index, published in October 2021.
Whilst the research found that most are investing with Environment, Social and Governance (ESG) in mind, they remain sceptical about whether these ‘green’ investments are making a significant enough difference to both the environment and society.
Read on to find out more.
Who is investing in ESG?
The Saltus Wealth Index discovered that it is the younger generation who have stronger opinions on greener investments. Eight in ten (80%) of those surveyed and aged between 18 and 24, invest in green stocks. However, this number diminishes with age, and falls to nearly a quarter (24%) when considering the over 65 age-bracket.
The research consisted of over 1,000 individuals with investable assets of £250,000 and above, with a median net worth of £1.5 million. Out of these HWNIs, almost two thirds (64%) stated they are now actively investing in ESG.
In terms of gender, the survey discovered that men are more likely to invest in green stocks, with 66% responding as such, compared to 59% of the women.
There were also variations in the interest of ESG investing, depending on the where the HNWI lived. Three quarters (75%) of those surveyed and living in London revealed they are actively investing in green stocks, whereas just half (50%) investing, lived in Scotland. Furthermore, less than half in the South West, Midlands and Wales are investing in impact or green stocks.
Are HNWIs thinking about investing in green stocks?
There are several possible reasons why HNWIs are or are not investing in ESG, with the main difference apparent between generations.
40% of HNWIs said they care more about ESG investments than the older generation, whereas 38% believed their children care more than themselves when it comes to green choices.
It was revealed that the main reason for those who are not investing in green stocks, is because HNWIs believe they don’t generate sufficient returns — with 31% of those surveyed stating this as the reason.
One Saltus Wealth Index respondent said:
“There aren’t enough funds – and right now the funds there are, are over-bought.”
More scepticism surrounds the difference that ESG investing makes on the environment and society, with over a quarter of respondents (27%) doubting the notable changes made as a result of their investment choices. In addition, 26% of HNWIs believe this form of investing to be just a temporary hype, whereas one in five (22%) revealed their doubts about the true environmental impact of green funds and whether they are in fact environmentally friendly.
It also comes down to details, as one in four (24%) of those surveyed believe that the analysis of green investment is not robust enough, and the reporting is not sufficient.
As new unprecedented challenges arise, whilst the country is still recovering from the pandemic, it begs the question of whether ESG investing will remain at the forefront of HNWIs’ thoughts. Although there remains doubt about the impact of green stocks, it seems fate lies in the hands of the younger generation.
Disclaimer: Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested.
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