Most investors believe in the positive impact of socially responsible investments, but many aren’t putting their money where their mouths are.
According to a recent MagnifyMoney survey, 67% of individual investors say they have a responsibility to invest in companies that have a positive impact on the world, and 51% of retail investors avoid investing in certain stocks due to moral or ethical concerns about a company’s business pursuits, CNBC reports.
However, only 32% of participants say they actively invest in at least one socially responsible stock or fund.
Socially responsible investment companies companies engage in environmental sustainability, alternative energy, or clean technology, while avoiding those that conflict with sustainability issues or personal values, like tobacco, crude oil, or firearms companies.
Sustainable investments have gained traction in recent years. According to Morningstar data, in 2020, investors funneled $51.1 billion into funds that employ environmental, social, and governance principles, or more than double the $21 billion in 2019.
However, in the recent MagnifyMoney survey, 30% indicated they want to practice socially responsible investing but haven’t yet actually adopted the strategies, and 20% said they’d only invest in socially responsible themes if the returns were comparable to other strategies.
Meanwhile, only 18% said they were not interested in these investments at all.
As more investors look to socially responsible investments, there are a number of ways to gain exposure to the ESG space.
“You can figure out what issues are important to you and look at the companies that are really trying to solve those issues with their products or services,” Craig Seidler, portfolio manager and director of public investments for BSW Wealth Partners, told CNBC.
Fund strategies that screen for holdings using various socially responsibility metrics have been a popular avenue to access ESG investments.
“There’s a whole ETF universe that’s coming out with things like ‘driverless car’ themes,” Seidler added. “There are a lot of different flavors … of mutual funds and ETFs out there.”
To learn the full survey findings, visit https://www.magnifymoney.com.
For more news, information, and strategy, visit the ESG Channel.