End of Week Notes
Schroders report: Investors are really into sustainable investing / The costs of climate change
Another week, it seems, another study comes out confirming the growing interest in sustainable investing. This week it was Schroders’ Global perspectives on sustainable investing 2017, based on a June online survey of 22,100 investors from 30 countries who expect to be investing at least 10,000 euros or the equivalent in the next year.
The survey is in line with what most others have found about interest in sustainable investing: It has grown to a high level. According to this survey, a very high level. When asked, “Compared to five years ago, how important has sustainable investing become to you?” 82% of U.S. respondents said “More important” and only 3% said “Less important.” That’s 82 to 3!
OK, you may be thinking that’s just too high to believe. As I’ve commented before about other surveys, there may be some positive response bias embedded in this one, but even if you want to discount the 82–3 result, it’s hard to argue that it doesn’t reflect substantial real interest in sustainable investing and that it is growing in importance to many people.
The survey also confirms that Millennials are leading the way. Again, not surprising. Millennials report the greatest change in the importance of sustainable investing compared to other generations and are more likely to report that they have actually increased their actual investments in sustainable funds. Not sure I believe these numbers completely either because the response was pretty high and that doesn’t square with the still-modest flows into sustainable funds, but it still suggests that investing is becoming more top-of-mind and at least something Millennials intend to do even if they haven’t already.
The survey also reports on various sustainability-minded activities and suggests that, more and more, people are realizing that investing is one of the ways they can express their preferences for living more sustainably.
In fact, the survey reports high correlations between sustainability-minded behavior in everyday life and sustainable investing, highest among Millennials but across all generations.
Finally, respondents weigh potential profit and positive societal impact about evenly in their expectations for sustainable investing. This tells me that focusing on ESG risk as a way to evaluate companies and weight portfolios for the purpose of reducing portfolio risk or adding alpha is just one part of the equation. Impact is the other, so funds are going to have to do more to demonstrate how they are delivering positive impact for their investors.
The Costs of Climate Change
A study released this week from the Universal Ecological Fund predicts that the costs of climate change in the U.S. related to extreme weather events and public health issues will reach $360 billion annually — nearly $1 billion per day — over the next decade, about 50% more than what estimated costs are already.
Here is a series of maps from a Bloomberg piece about the study showing the increasing costs of extreme weather events in the U.S.:
