Interest in environmental, social, and governance (ESG) training has waned over the last two years, finds new data from Cerulli Associates today.
Attention has stalled even among younger investors, from 72% in 2022 to 66% in 2023, reported Cerulli. Overall preference for ESG investing fell slightly in 2023 from 48% to 46%. Households in their 50s were the only demographic to remain consistent in their attitudes, with 44% supporting sustainable investing and 13% expressing strong support.
Despite the diminished enthusiasm among investors, Cerulli’s research notes that 49% of investors and 42% of self-directed investors would rather not invest in companies that make products they consider objectionable. This includes 54% of individuals with less than $250,000 in investable assets. Those who hold between $1 to $2 million in investable assets were the cared the least about investing in these types of companies, at 46% of this group holding an active preference.
Furthermore, while investors report less interest in ESG investing, they still remain concerned on ESG-related issues, reports Cerulli. Sixty-seven percent of respondents would rather invest in a company that pays their workers a fair or living wage.
This interest presents an opportunity for advisors wanting to attract new clients, especially as a growing number of Millennials accumulate wealth in the coming years. Services like online advisory screens, which uses ESG screens to filter funds based on sustainable and social factors, can be used to attract clients who want ESG-friendly options in their investments.
“A sizable population of investors who place value in ESG screens still exists, particularly those centered on environmental and living wage issues, even if they otherwise might not be interested in becoming ESG investors,” says Scott Smith, director at Cerulli. “This creates an opening for both advisors and providers to help interested clients find investments that cater to those values, thereby creating a more tailored portfolio solution while also getting to know their clients as people beyond a simple transactional relationship.”
SEE ALSO:
How Asset Managers Can Get ‘Dabblers’ to Pursue More DC Business: Cerulli
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
