The demand for sustainable investments is growing. A study by LGT shows that there is indeed substantial awareness, but a certain amount of skepticism prevails.
«The worldwide destruction of the environment, climate change and growing divide between the rich and the poor are raising concerns among investors,» says Julia Bertsch (pictured above), who is responsible for market research projects at Liechtenstein-based LGT. Her statement is based on the findings of this year’s LGT Private Banking Report.
The majority of private investors surveyed would like to become involved in this area and believes they can make a positive contribution to a more livable future through sustainable investments (see Figure 1).
Gender Investment Gap
There is, however, a need to differentiate – because a gender gap also exists when it comes to sustainable investments: «The results indicate that women are considerably more positive when it comes to this issue than men,» says Bertsch (see Figure 2). «They find the matter more important and are more convinced that by making such investments, they can have a positive impact on the environment and society.» In contrast, male investors significantly more often view sustainability as a fashionable topic that is receiving too much attention.
Sustainable Investment Decisions
Simply believing in the effectiveness of sustainable investments is, of course, not enough. Words must be followed by actions – and Bertsch has observed that this is indeed the case: «Over 75 percent of the investors surveyed put their convictions into practice and take environmental aspects such as protection of the environment and climate; social aspects, for example the observance of human rights; or ethical aspects such as excluding weapons from their investment universe, into consideration when making their investment decisions.» (see Figure 3). According to Bertsch, the latter – the ethical aspects – have the greatest influence on these decisions, followed by social and environmental criteria.
A Certain Amount of Skepticism
A majority of respondents, however, sees advocating for the environment, society and our shared future as a responsibility that lies not only with themselves, but also with banks and companies. But it is precisely in this area, namely when it comes to the implementation of sustainable investments, that criticism exists. 64 percent of investors surveyed suspect that banks and companies often use sustainability only as a label with which to polish their image (see Figure 1).
«Many investors question the motives for banks’ and companies’ commitment to sustainability, while at the same time wishing that these would take more initiative,» Bertsch ascertains.
Banks and relationship managers therefore have a role to play: they must provide high-net-worth private investors with an offering and solutions that make sustainable investments possible. Because the LGT Private Banking Report shows that sustainable investing is not just a fashionable topic. Investors are taking a serious look at the matter and wish to use it as a vehicle for contributing to a better future.
Julia Bertsch studied strategic management at Leopold-Franzens-Universität in Innsbruck, Austria. After a period abroad spent in London, she completed LGT’s Graduate Program in marketing and communications, where she is now responsible for implementing and managing a broad range of market research projects.
The LGT Private Banking Report 2018 was published in June. The complete report can be found here (available only in German). The survey has been conducted every two years since 2010 with the objective of gaining insights into the investment behavior and the attitudes of private banking clients. 360 high-net-worth individuals from Germany, Austria and Switzerland with disposable investment capital of over 900,000 Swiss francs are surveyed to this end. The author of this study is the Swiss professor of finance Teodoro Cocca of Johannes Kepler University Linz.
