In the news: Responsible interest rises

Interest in sustainable investing and bonds has been rising throughout the Covid-19 crisis, but not for wealthier investors
by Bethan Rees


Boring Money’s Great British sustainable savers census survey, which was sent out to 19,000 financial advisers and 5,000 consumers, reports that 40% of financial advisers and consumers say they have a higher interest in sustainable investing as a result of the pandemic, according to Sophie King in an article for Professional Adviser.

King points to a significant generational trend, with 89% of 18 to 44-year-olds saying it’s important a fund manager offers sustainable investment options.

Another stat King highlights is the percentage of consumers who would value a conversation with an adviser about sustainable investing: 83%. She quotes Fergus McCarthy, UK distribution director at Standard Life Aberdeen (a lead sponsor of the research), who says: “Customers and clients increasingly want to reflect their individual values in their investment decisions.”

Only 30% of investors are aware of environmental, social and governance (ESG) investing, says King, but Morningstar UK, another research partner, says its mission is to make sustainable and ESG investing clear to customers.

Professional Adviser article

Bonds, sustainable bonds

Interest in sustainable bonds is also on the rise, reports Darryl Yu in an article for The Asset. According to Moody’s Investors Service data, in Q2 2020 the volume of sustainability bonds (including green and social bonds) set a new record of issuance, totalling US$99.9bn, writes Yu. This is a 65% increase compared to Q1 2020, and the growth has been “primarily supported by an increased issuance of social bonds to address problems caused by the pandemic”, he says. In South Korea, some issuers have created dedicated social Covid-19 bonds that will support small and medium enterprises impacted by the pandemic.

Yu quotes Matthew Kuchtyak, assistant vice president – ESG & sustainable finance at Moody’s, who says that the total combined social and sustainability bond volumes for the year could reach US$150bn, because “pandemic response efforts and [a] heightened awareness of social issues related to healthcare and inequality continue to support issuance”.

“The current encouraging market signs highlight the incredible journey sustainable finance has taken since its earliest days more than a decade ago with the issuance of the first green bond,” Yu writes.

The Asset article
Sustainable investing not important to all

It appears that sustainable investing isn’t at the top of the list for some, though. According to an article by Imogen Tew for FT Adviser, “wealthier investors are less susceptible to sustainable investing than their less wealthy counterparts”.

The data she’s referring to is a poll taken in April 2020 of 1,150 people by asset manager Investec. It shows that just 14% of consumers with investable assets of more than £100,000 think it’s very important the companies they invest in have a positive impact on society and the environment. This is in comparison to 17% of those with investable assets of £40,000–£100,000 and 18% with investable assets of £20,000–£40,000.

The data shows a difference in age brackets, too. For respondents aged 18–54, 32% say sustainable investing is either very or quite important, versus 22% for those aged 55+.

“Investec’s research comes as the asset manager launches the UK’s first retail ESG-linked deposit plan,” writes Tew. “The FTSE4Good six-year deposit plan is a six-year fixed term plan tied to the FTSE4Good UK 50 – an index made up of the largest 50 companies in the FTSE that meet the ESG criteria.”

FT Adviser article 

It seems investors and consumers are waking up to responsible finance during the Covid-19 hibernation period, but will wealthier investors increase their appetite for sustainable investing?

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Published: 21 Aug 2020
  • Corporate finance
  • Bonds
  • Wealth Management
  • ESG
  • Covid-19
  • responsible investment
  • responsible finance
  • sustainable investing

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