Betterment Survey Sees Rising Interest in Socially Responsible Investing, More Room for Education
New data uncovers the role investors, advisors and employers play in driving understanding and adoption of ESG-themed investments
Socially responsible investing – also known as ESG (environmental, social, governance) investing – has experienced exponential growth over the past few years. This category of investing focuses on companies whose products and services pass screening criteria for environmental sustainability or commitments to social good. According to data from Morningstar, U.S. sustainable funds netted nearly $70 billion in 2021, a 35% increase over 2020’s high-water mark. Yet, despite record-setting fund flows and rising consumer interest, ESG investments are not in the portfolios of every investor.
See related article: Ping An Promotes Responsible Investing for China
A new survey from Betterment, the largest independent digital investment advisor in the U.S., found that while many respondents had some level of interest in ESG investments, a large education gap still remains. The new report, “Retail Investors and ESG: Assessing the Landscape” polled 1,000 U.S. investors to examine their level of understanding in ESG investments, what are the drivers of investing in the category, and the role employers and advisors play in educating individuals about this rapidly growing sector.
Key findings of the report include:
- Many respondents are already invested – or interested in investing – in ESG. However, there is still an education gap when it comes to ESG-themed investments
- More than a quarter of respondents (26%) currently hold some type of ESG-themed investment; 46% of those who have not sought out ESG investment options to date would be interested in doing so.
- That said, more than half of respondents (54%) expressed a level of unfamiliarity with ESG. Over a third (35%) indicated they have never sought out ESG investments and are not interested in doing so.
- The majority (51%) of those who indicated they were not interested said it was because they do not understand ESG-themed investments well enough.
- Employees want more from their HR/benefits teams – including the option to invest sustainably.
- Nearly half (40%) of respondents don’t know what kind of companies their retirement plan is invested in.
- However – of those that do know, almost three quarters (72%) would be likely to contribute more to their retirement account if they were given the option to invest sustainably.
- 22% have proactively asked their employer’s HR/benefits department if ESG investing options are available in their workplace retirement plan, and another 36% would be interested to know.
- Advisors have the potential to drive more ESG investment optionality
- Only 44% of respondents that work with a financial advisor indicated that their advisor has discussed available ESG-based portfolio options with them.
- However, nearly half (47%) of respondents said that access to ESG investment opportunities would make them more likely to work with a financial advisor, whereas only 6% indicated they would be less likely.
- 67% talk to their advisor about the causes and values that are important to them personally.
“In the face of climate change, political activism and a more acute understanding of corporations’ impact, American investors are increasingly engaged in the companies they support. One way this has come to life is the rise of ESG investing,” said Boris Khentov, SVP Product Strategy & Sustainable Investing at Betterment. “It’s encouraging to see so many respondents already invested in ESG funds that reflect their values, but those on the sidelines also represent a huge opportunity as they become more educated. At Betterment, we’re committed to closing the knowledge gap and driving awareness of ESG investment offerings.”
Read or download the full report here.
An online survey commissioned by Betterment was presented to a group of potential respondents. A total of 1,000 respondents completed the survey, which was conducted by Schlesinger Group, an independent research company.
The survey collected a representative sample of U.S. respondents who have any kind of investment with the exception of only having a 401(k). All were invited to take the survey via an email invitation. Panel respondents were incentivized to participate via the panel’s established points program.
Findings and analysis are presented for informational purposes only and are not intended to be investment advice, nor is this indicative of client sentiment or experience.
Any links provided to other websites are offered as a matter of convenience and are not intended to imply that Betterment or its authors endorse, sponsor, promote, and/or are affiliated with the owners of or participants in those sites, unless stated otherwise.