Wealthy U.S. Investors Lag Peers in Sustainable Investing

Wealthy U.S. Investors Lag Peers in Sustainable Investing

High-net-worth individuals in the United States engage in sustainable investing — defined as the integration of societal concerns, personal values, and/or an institutional mission into one's investment decisions — at lower rates than do their peers in other countries, a report from UBS Group finds.

Based on a survey of fifty-three hundred investors in ten global markets, the report, Return on Values (16 pages, PDF), found that while 65 percent of respondents said they believe "it is highly important to help create a better planet," only 39 percent globally and 12 percent in the U.S. actually hold sustainable investments in their portfolios. The highest rates of sustainable investing were found among respondents in China (60 percent), Brazil and the United Arab Emirates (53 percent), and Italy (51 percent). At the same time, the survey found that wealthy U.S. investors who do make sustainable investments allocate, on average, a larger share of their portfolio — 49 percent, compared with a global average of 36 percent — to those investments.

The report notes that fewer than half of the respondents said they were familiar with the concept of "sustainable investing" (47 percent) or its major elements — "exclusion" (excluding companies or industries from portfolios where they are not aligned with an investor's values, 41 percent), "integration" (integrating environmental, social, and corporate governance factors into  investment decision making, 42 percent), and impact investing (investing with the intention to generate measurable environmental and social impact as well as a financial return, 38 percent).

Interest in the practice is growing, however, with 72 percent of high-net-worth investors between the ages of 18 and 34 and 40 percent of those with at least $50 million in assets already choosing to make sustainable investments. Among those who are not investing sustainably, 72 percent said it was difficult to measure the impact of sustainable investments, 68 percent said such investments weren't well established, and 67 percent said they preferred to maximize their investment returns and focus on giving out of the proceeds.

"Education on the benefits, impact, and competitive returns is going to have to be accelerated to bring sustainable investing from niche to normal," said Mark Haefele, CIO at UBS Global Wealth Management. "Today, that is both the challenge and the opportunity."

"New UBS Investor Watch Study Reveals Stark Differences in Sustainable Investing Globally." UBS Group Press Release 09/19/2018. "Return on Values." UBS Group Report 09/19/2018.