'Number of private investors who say they consider ESG when investing drops for third year in a row'

The number of private investors who say they consider ESG (environmental, social, and governance) when investing has dropped for the third year in a row, according to the annual ESG Attitudes Tracker from the Association of Investment Companies (AIC).

ESG provides a framework which measures how a business impacts the environment and society, and how transparent and accountable it is.

The percentage of respondents considering ESG is now 48 per cent, having fallen from 66 per cent in 2021, 60 per cent in 2022 and 53 per cent in 2023, according to the study conducted for the AIC by Research in Finance.

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Just over two-fifths of investors (43 per cent) consider themselves “fans” of ESG investing, down from 60 per cent in 2021, 51 per cent in 2022 and 50 per cent in 2023.

The number of private investors who say they consider ESG (environmental, social, and governance) when investing has dropped for the third year in a row, according to the annual ESG Attitudes Tracker from the Association of Investment Companies (AIC). (Photo by Victoria Jones/PA Wire)The number of private investors who say they consider ESG (environmental, social, and governance) when investing has dropped for the third year in a row, according to the annual ESG Attitudes Tracker from the Association of Investment Companies (AIC). (Photo by Victoria Jones/PA Wire)
The number of private investors who say they consider ESG (environmental, social, and governance) when investing has dropped for the third year in a row, according to the annual ESG Attitudes Tracker from the Association of Investment Companies (AIC). (Photo by Victoria Jones/PA Wire)

Nick Britton, Research Director of the Association of Investment Companies (AIC), said: “Our ESG Attitudes Tracker shows that investors’ love affair with ESG investing continues to cool.

"That doesn’t mean they reject it altogether though. To extend the metaphor, they are thinking about the bits of ESG they like and those they don’t, and deciding if they want to make this a longer-term relationship.

“One interesting aspect of this year’s research is that almost all the governance issues have increased in importance for investors. “Investors are increasingly savvy and recognise that governance is the bedrock of ESG investing: put another way, you need the G before you can have the E and the S.

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“Though passions for ESG may have cooled, our research also suggests that love has not turned to hate.

Mr Britton added: "Few investors are actively hostile to ESG: for those who aren’t so engaged, it would be more accurate to describe them as sceptical, uninterested, or prioritising investment performance over ESG issues.”

The study also found age differences when it comes to attitudes to ESG.

For example, 53 per cent of respondents aged under 45 consider ESG when investing, compared with 43 per cent of those aged 65 or above, according to the study’s findings.

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